Fed Chair Kevin Warsh and the FOMC kept interest rates unchanged at 3.75%-4.00% at the October meeting, as inflation has run above the 2% target for 67 months. Warsh noted progress since the quarter-point hike in September but repeated the goal of a 'timely return' of inflation to 2%, which the author reads as a sign that more aggressive tightening could follow. According to the CME FedWatch Tool, there is a 75% chance of a quarter-point hike at the Dec. 9 meeting and a 46% probability of at least 75 basis points of hikes by mid-September 2027. The author argues that such tightening could hurt a stock market already at a historically high valuation, with the S&P 500's Shiller P/E topping 40 for only the third time in 156 years. Slower AI infrastructure spending from higher borrowing costs could also quickly weigh on growth.
Summary written by Upside AI from the original article. Read the source for full details.
Read the original on Yahoo Finance ↗
Keywords
FedKevin Warshinterest ratesinflationvaluationSPY
Open a keyword to see other news on the same topic.
Related tickers and likely impact
QQQ
▼ Likely negativeInvesco QQQ Trust
Relevance: medium
| Market | US stocks |
|---|---|
| Sector | ETF |
| Close on 10/30/2026 | 690.49 |
| Change that session | -3.47% |
SPY
▼ Likely negativeSPDR S&P 500 ETF
Relevance: medium
| Market | US stocks |
|---|---|
| Sector | ETF |
| Close on 10/30/2026 | 755.71 |
| Change that session | -1.77% |
Impact is scored by AI from the headline and may be wrong. It is not investment advice.
Related news
- The Latest Inflation Data Spells Bad News for Fed Chair Kevin Warsh and the Stock Market
Accelerating inflation is adding pressure on the Federal Reserve to raise rates again: September CPI rose at a 3.7% annualized rate, with energy up 20.4%, while the PPI jumped 6.3%, with energy surging 35.4%. WTI crude topped $100 a barrel, up 77% from its $57 opening price in 2026, as Iran's closure of the Strait of Hormuz cut oil supply. CME's FedWatch tool shows a 91% probability of another 25-basis-point hike in December, and Fed Chair Kevin Warsh warned more increases may come if inflation stays high. The article argues higher rates could squeeze corporate earnings and stock prices, noting the S&P 500's CAPE ratio of 41 is the second-highest after the peak of the 2000 dot-com bubble.
- Stock Market Today: Dow Wavers Ahead Of Rate Decision, Warsh Comments; Robinhood Plunges (Live Coverage)
The Dow Jones index fell Wednesday ahead of the Fed's rate decision and Warsh's comments. Robinhood shares plunged on earnings.
- Stock market today: Dow futures fall, S&P 500 and Nasdaq futures climb ahead of Fed decision, Big Tech earnings
US stock futures were mixed ahead of a critical day with a Fed decision and earnings from Microsoft and Alphabet. Dow futures fell 0.3%, S&P 500 futures traded just above the flat line, and Nasdaq-100 futures rose 0.3%. Tech sentiment improved this week as the S&P 500 and Nasdaq posted back-to-back gains, and semiconductor stocks rallied on Tuesday after Broadcom's CEO negotiated a consortium of banks to announce a $63 billion financing structure for AI compute capacity. The Fed is expected to hold rates steady at 2 p.m. ET despite elevated inflation readings, and investors will watch Chairman Kevin Warsh's press conference for any hawkish signals. Microsoft reports after offering buyouts to up to 60,000 employees; other companies reporting include Ford, GE Vernova, T-Mobile US, eBay, Chipotle and ServiceNow.
- Fed Chair Kevin Warsh and the FOMC Just Fired a Warning Shot at the Second-Priciest Stock Market in History
On Sept. 16, Fed Chair Kevin Warsh and 11 other voting FOMC members unanimously raised the federal funds rate by 25 basis points to 3.75%-4.00%, the fourth time this century the central bank has started a rate-hiking cycle. Persistent inflation drove the move: August was the 66th consecutive month with annualized inflation above the 2% target, and the minutes cited tariffs, the Iran war and AI infrastructure spending as key sources. Most participants saw another rate increase by year-end as likely appropriate. The article argues this is a risk for a historically expensive stock market, noting that the S&P 500's Shiller P/E came close in June to the highest level in 156 years, reached just before the dot-com bubble burst, and that higher borrowing costs could slow AI expansion partly financed with debt.
- Kevin Warsh Offered a Warning on Inflation. Here's What History Says Is Coming Next.
The Fed held rates steady at its October 29, 2026 meeting after earlier hikes, and Chair Kevin Warsh said inflation has run above target for close to 6 years and that the Fed will deliver price stability. Citing CME Group's FedWatch, the article puts the probability of another hike at the December 2026 meeting at 70.9%, and 79% for January. It compares past cycles: Volcker's hikes to 20% in 1979–1981 triggered a recession and a more than 20% fall in the S&P 500, Greenspan's 1994–1995 hikes led to a soft landing, and Powell's 2022–2023 hikes cut inflation from over 9% to below 3% while the S&P 500 entered a bear market in 2022. The author sees Powell's cycle as most similar, though inflation is lower now and stock valuations are higher. The article lists possible responses: prepare for several scenarios, be cautious with rate-sensitive stocks with stretched valuations, and focus on high-quality companies, especially dividend payers.
- 4 Words From Fed Chair Kevin Warsh Should Have Wall Street and Investors Quaking in Their Boots
The Fed held interest rates steady at the FOMC meeting on Oct. 28, but Chair Kevin Warsh said the central bank is 'working on' price stability as inflation remains above the 2% target. The article reads his remarks as implying further rate hikes, consistent with an ongoing tightening cycle. CME's FedWatch Tool puts a 65% probability that rates rise by at least 75 basis points, to 4.50%-4.75%, by Sept. 15, 2027. The article links inflation to tariffs, the Iran war and the AI build-out, noting that import prices for computer and electronic products rose 7.4% in the first 6 months of 2026.
Related markets
Latest news
- FBI Blames North Korea for $6B Binance Hack as Exchange Reopens Withdrawals
The FBI said North Korea's TraderTraitor was behind the theft of more than $6 billion from Binance and published hundreds of linked addresses. Binance began restoring withdrawals on Sunday, processing $4.649 billion in withdrawals and $1.01 billion in deposits in the first nine and a half hours, a net outflow of about $3.64 billion, or 2.1% of the $171 billion in assets reported in its latest proof of reserves. The FBI said the hackers mainly converted stolen assets into Ethereum and were expected to launder funds through DeFi and instant swap services, urging businesses to block transactions tied to hundreds of Ethereum addresses, 19 Bitcoin addresses and one Solana address. Chainalysis said more than $500 million had moved through Tron, while CEO Richard Teng said Binance had replenished about 95% of affected assets and would absorb the financial impact. According to Reuters, Circle has frozen more than $1.1 billion in USDC.
- The latest market wobble sees Citi giving up on this big tech trade
Hyperscaler stocks and growth plays have underperformed amid a sharp rotation in the market.
- Tech stock plunge aftermath a seen in 3 pictures
The technology sector has fallen 10% from its peak as investors scrutinize AI capital spending, free cash flow and the durability of earnings growth, according to Keith Lerner, chief markets strategist at Truist, who said further downside risk is possible. More than $1 trillion in market value was wiped out on Friday as worries grew over weaker cash flow at Big Tech firms spending heavily on AI. Google (GOOG) reported negative free cash flow in the third quarter, Amazon (AMZN) did the same, and Meta (META) posted negative free cash flow for the first time since 2012 a week earlier. Tech stocks now trade below their 10-year average P/E ratio, and history suggests more selling pressure could follow.
- Stock Market Today: Dow Jones, S&P 500 Futures Rise Ahead of Apple, Palantir Earnings: RYAAY, USLM, INO in Focus
U.S. stocks rose on Monday as Dow Jones, S&P 500 and Nasdaq 100 index futures advanced following Friday's lower close. President Donald Trump said Sunday that the U.S. has already won in Iran and will wrap up the war.
- Gold Prices Recover Above $3,900 as Investors Return Following October Selloff
Gold climbed back above $3,900 an ounce on Monday as investors returned after its sharpest monthly decline since 2008, with spot gold up 0.7% to $3,902.81. A weaker US dollar, with the Dollar Index down 0.4% to 101.45, supported the recovery, while silver rose 2.6% to $50.4095 an ounce. The previous session saw gold fall 3.7% to a one-year low. ANZ said elevated bond yields were an obstacle to a sustained rebound, citing US consumer spending expanding at an annualised rate of 3.8%, though gold-backed ETFs attracted more than 50 tonnes of inflows in September even as US Treasury yields exceeded 5%. Oil prices fell for a second straight session after Secretary of State Marco Rubio said President Trump preferred a diplomatic settlement.
- S&P 500, Nasdaq Futures Rise Premarket After Wall Street’s Worst Week In Months: AAPL, PLTR, GOOGL, INTC, TGTX In Focus
U.S. stock futures edged higher premarket on Monday, recovering some ground after Wall Street ended the previous week in the red. S&P 500 and Nasdaq-100 futures rose 0.5% and 0.83%, after the S&P 500 fell 2% and the Nasdaq 100 dropped 3.5% on Friday as investors pulled back from tech and AI-related stocks. Oil fell more than 4% as optimism over diplomatic efforts to end the U.S.-Israeli war with Iran eased supply concerns, with Brent for January delivery down 4.21% to $108.66 a barrel and WTI down 4.1% to $99.85. Apple and Palantir report earnings after the close, while Alphabet fell 12.6% last week and Intel dropped 24% after a weaker-than-expected fourth-quarter outlook.
Get the briefing on Telegram or Zalo
Join the Upside Telegram channel or Zalo group for the Vietnam stocks and gold briefing at 8:00 and 19:00 (Vietnam time) on trading days, plus a weekly wrap on Saturday morning.