4 hours ago - Economy
How markets reacted to the new Fed chairman's policy committee debut
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Stocks fell and bond yields spiked on new Fed chairman Kevin Warsh's policy committee debut Wednesday afternoon.
Why it matters: Investors read the vibe as surprisingly hawkish — the yield on the two-year Treasury note rose after the Fed released its policy statement at 2pm, a sign that the market is pricing in rate hikes.
- The yield on the two-year is now at its highest in a year.
- The S&P 500 and Nasdaq both slumped.
Between the lines: President Trump wanted someone at the helm who would cut rates, but inflationary pressures are pushing the Fed in a different direction.
The bottom line: Sure, AI has powered the stock market to new heights this year, but don't sleep on the power of interest rates to shake up stock dynamics.
