Stocks Fluctuate Before Warsh’s First Fed Decision: Markets Wrap
(Bloomberg) — Wall Street traders gearing up for the Federal Reserve decision refrained from making big moves as they waited to see whether new Chair Kevin Warsh will validate bets on future rate hikes or lean against them.
In the countdown to the Fed announcement, equities wavered alongside bonds and the dollar. Money markets have eased their most intense expectations for interest-rate increases, but they still have priced in a full quarter-point boost by the end of the first quarter of 2027.
Fed policymakers are widely expected to stay on hold Wednesday, and investors will keep a close eye on how strongly Warsh expresses support for the central bank’s commitment to returning inflation to its goal. Reporters will also likely press him on how news of an interim peace deal between the US and Iran affects his views.
The recent slide in oil prices gives Warsh a bit more wiggle room, but “he still has a narrow path to walk between being too sunnily dovish – and losing the bond market – and being too hawkish – and inviting renewed bets on hikes,” said Krishna Guha at Evercore.
Policymakers are also expected to release fresh economic projections and an updated “dot plot” — the chart that shows where they see rates heading. Economists surveyed by Bloomberg News expect officials to project higher inflation, and to push back expectations for rate cuts into 2027. Policymakers had previously projected one cut in 2026 and one in 2027.
Fed officials will release their post-meeting statement at 2 p.m. Wednesday in Washington, with Warsh’s first press conference as chairman to follow 30 minutes later.
While the recent drop in oil prices helps to ease inflation, it can also spur more economic activity, which could warrant higher interest rates in the future, according to said James Demmert at Main Street Research.
“Any stock market volatility caused by Warsh’s commentary Wednesday is a buying opportunity in our view since the market fundamentals remain in place,” he said.
In the run-up to the Fed decision, data showed US consumers ramped up spending in May across a broad range of retailers, signaling households powered ahead despite higher gasoline prices.
“Retail sales in May point to a resilient consumer despite accelerating inflation and higher borrowing costs,” said Angelo Kourkafas at Edward Jones. “Looking ahead, the recent drop in oil prices should provide relief at the pump, while an improving labor market suggests a stable outlook for consumer spending.”
Corporate Highlights:
SpaceX fell for the first time since its initial public offering, snapping a three-day rally that vaulted it past Amazon.com Inc. as the world’s fifth-largest company. Blue Origin is already rebuilding the Florida launch site where its New Glenn rocket exploded last month, making way for the space company to fly again this year and rejuvenate its ambitions to challenge SpaceX. CME Group Inc. Chief Executive Officer Terry Duffy is handing over the reins after more than 25 years at the world’s largest derivatives exchange, where he helped oversee two major mergers and the transition from floor-based trading to an electronic-trading powerhouse. Duffy will step down as CEO on March 1 and transition to executive chairman. Chief Financial Officer Lynne Fitzpatrick will take over as CEO. La-Z-Boy Inc. jumped after the home furniture store’s reported adjusted earnings per share for the fourth quarter beat the average analyst estimate. UniQure NV surged after it announced it would be able to file for US approval of its Huntington’s disease gene therapy before conducting a new study. What Bloomberg strategists say…
“There’s a strong argument that the US economy can withstand, and probably requires, more rate increases because the demand for financing and expectations for spending from the AI giants are pushing the neutral interest rate higher. The sheer volume of borrowing alone this year argues that rates are low.”
—Sebastian Boyd, Macro Strategist, Markets Live. For the full analysis, click here.
Some of the main moves in markets:
Stocks
The S&P 500 rose 0.1% as of 12:02 p.m. New York time The Nasdaq 100 rose 0.6% The Dow Jones Industrial Average rose 0.4% The Stoxx Europe 600 rose 0.5% The MSCI World Index rose 0.2% Currencies
The Bloomberg Dollar Spot Index was little changed The euro fell 0.1% to $1.1592 The British pound fell 0.2% to $1.3395 The Japanese yen rose 0.1% to 160.21 per dollar Cryptocurrencies
Bitcoin was little changed at $65,758.77 Ether fell 1.3% to $1,772.51 Bonds
The yield on 10-year Treasuries was little changed at 4.43% Germany’s 10-year yield was little changed at 2.93% Britain’s 10-year yield declined four basis points to 4.75% Commodities
West Texas Intermediate crude rose 1% to $76.79 a barrel Spot gold rose 0.8% to $4,365.42 an ounce ©2026 Bloomberg L.P.
