US stocks finished lower on Friday after Federal Reserve Chairman Kevin Warsh struck a hawkish tone on inflation at the central bank’s annual Jackson Hole symposium.
The S&P 500 fell 0.25% to 7,711.76, while the Nasdaq Composite declined 0.52% to 26,402.42 as semiconductor stocks came under pressure. The Dow Jones Industrial Average was little changed, slipping 9.45 points, or 0.02%, to 53,559.99.
Despite Friday’s losses, the major indices finished the week higher. The S&P 500 gained 0.5%, the Nasdaq added 0.9% and the Dow rose 0.5%, snapping a two-week losing streak.
Warsh said recent CPI and PCE readings had been better than expected but did not provide sufficient evidence that underlying inflation had meaningfully improved. He reiterated the Fed’s commitment to returning inflation to its 2% target and indicated policymakers were prepared to act if price pressures remained persistent.
Markets responded by increasing expectations for another rate rise. Fed funds futures put the probability of a September increase at 57.5%, up sharply from 35.4% a day earlier.
Technology stocks were among the main laggards, with Nvidia and Intel lower. Marvell Technology dropped more than 10% after its current-quarter gross margin guidance disappointed investors. Gap bucked the weaker trend, rising about 13% despite mixed quarterly results after announcing a new chief executive for its Old Navy business.
Australian Market Outlook
Australian shares are set to start the week lower, with S&P/ASX 200 futures down 36 points, or 0.4%, to 9,009.
The shift in US rate expectations is likely to weigh on sentiment, particularly across rate-sensitive sectors, after Wall Street reversed earlier gains following Warsh’s speech. The sharp fall in gold could also pressure local gold miners at the open.
Investors will continue to assess the implications of higher global interest rates and bond yields as the local reporting season winds down, while attention increasingly shifts back towards the domestic economic outlook and the Reserve Bank of Australia’s next policy move.
