S&P 500 Slips 0.3% as Fed Hike Odds Jump to Nearly 60%
Updated
Updated · The Associated Press · Aug 28
S&P 500 Slips 0.3% as Fed Hike Odds Jump to Nearly 60%
3 articles · Updated · The Associated Press · Aug 28
Summary
Nearly 60% odds of a September Fed rate hike, up from 35% a day earlier, pushed U.S. stocks lower Friday as investors absorbed Chair Kevin Warsh’s Jackson Hole remarks.
Warsh called short-term rates the Fed’s “predominant tool” and said broad financial conditions are not restrictive, reinforcing expectations that rates may need to rise to curb inflation.
The two-year Treasury yield jumped to 4.34% from 4.22% after the speech, while the S&P 500 fell 0.3%, the Dow lost 50 points and the Nasdaq dropped 0.5%.
Longer-dated yields rose less sharply — the 10-year reached 4.72% and the 30-year 5.20% — suggesting bond investors see less risk of entrenched inflation farther out.
The market reaction also highlights a policy tension: Warsh favors rate moves over bond buying even after the Treasury’s unusual recent buyback plan aimed to ease pressure from high long-term yields.