The U.S. stock market lost roughly $300 billion in value after Federal Reserve Chair Kevin Warsh delivered a hawkish message on inflation, raising concerns that monetary policy could tighten further. Warsh said recent inflation data have not shown sufficient improvement and stressed that the Fed still has “work to do” if price pressures fail to move convincingly toward its 2% target.
The comments pushed investors to increase bets on another interest-rate increase. Markets are now pricing roughly a 60% probability of a September rate hike, up sharply from about 35% before the speech.
Stocks moved lower as Treasury yields climbed, with the S&P 500 falling 0.25% and the Nasdaq Composite dropping 0.52%. Higher rates would increase borrowing costs and put additional pressure on equity valuations, particularly among growth and technology stocks.
