The S&P 500 slipped Friday but remained on track for a winning week after Fed Chairman Kevin Warsh flagged persistent inflation risk at Jackson Hole. Traders pushed up September rate-hike odds and short-term Treasury yields jumped in response.
The S&P 500 traded down 0.4% on Friday. The Nasdaq Composite slid 0.7%, weighed down by losses in semiconductor stocks including Nvidia and Intel, and the Dow Jones Industrial Average shed 30 points, or 0.1%.
Despite the daily pullback, the S&P 500 and Nasdaq are pacing for an advance of less than 1%. The Dow is heading for a gain of nearly 1%. A positive close would mark the blue-chip index's first winning week in three.
Warsh remarks lift rate-hike bets
The selling followed Warsh's remarks at the central bank's annual symposium in Jackson Hole, Wyoming, where he signaled underlying inflation trends have not meaningfully improved. According to CNBC: "I stand here today committed to a discipline, not to a decision," Warsh said in prepared remarks to fellow policymakers, economists and media members.
Bets among fed funds futures traders that the Fed will raise rates in September increased to around 57% on Friday, per CME Group's FedWatch tool. That is up from 35.4% just a day earlier.
Treasury yields on the short end of the curve moved higher after Friday's speech, while long-end yields — which are linked to borrowing costs throughout the economy — held roughly flat. The 2-year Treasury yield jumped more than 6 basis points to 4.298% following the address.
Earnings add to the mix
Investors also digested fresh earnings results. Gap shares jumped 13% despite a mixed quarterly report after the retailer announced a new chief executive for its Old Navy brand. Marvell Technology slid about 10% after issuing current-quarter gross-margin guidance that disappointed the Street.
Source: CNBC
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