Wall St dips as rising oil prices, hawkish Fed bets pressure stocks
The main U.S. stock indexes slipped on Monday after military clashes between the United States and Iran drove up oil prices, stoking inflation fears after Fed Chair Kevin Warsh's hawkish remarks in his maiden Jackson Hole address the previous week. The losses could set the tone for September, typically a weak month for equities, and are likely to up the ante at the U.S. Federal Reserve's meeting…
Major U.S. stock indexes fell on Monday following military confrontations between the United States and Iran, which increased oil prices and heightened inflation concerns following Federal Reserve Chair Kevin Warsh's aggressive remarks at his inaugural Jackson Hole speech. The decline may signal the tone for September, a traditionally poor month for equities, and likely intensify pressure on the U.S. Federal Reserve for its upcoming meeting.
Traders estimate a greater than 60 percent probability of a rate increase at the Fed's September meeting, a significant jump from 41.4 percent a week ago, as Warsh suggested policymakers may need to raise borrowing costs if inflation fails to decline to the central bank's 2 percent objective. With no significant downside shock, the responsibility now falls on Warsh to deliver a September hike.
Otherwise, he risks undermining the credibility he earned on Friday, according to analysts at BofA Global Research. Warsh's comments, made on Friday at the Fed's Jackson Hole symposium in Wyoming, came after mixed economic data in recent weeks. A consumer inflation report this month revealed price pressures.
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