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US markets end in red after Warsh signals possible rate hike

29 Aug 2026 Evaluate

The US markets ended in red on Friday as chipmakers shares trimmed the previous session’s gains and following Fed Chairman Kevin Warsh's statement signaling a possible rate hike due to persistently high inflation. Speaking at Jackson Hole Symposium, Federal Reserve chairman Kevin Warsh said that underlying inflation is not slowing and vowed to fight price growth until it comes closer to 2%. Meanwhile, he also stated that the labor market continues to remain consistent and resilient, with employment increasing the probability of a rate hike in the coming policy meetings.

The Chairman reiterated that the PCE price index remains the gauge to be targeted, clarifying doubts from market participants after he downplayed a strict inflation gauge and opted for a more flexible model touted by one of the task forces, he created. The Federal Reserve left the federal funds rate unchanged at 3.50%-3.75% for a fifth consecutive meeting in July 2026, in line with expectations, despite markets assigning roughly a one-in-three probability to a rate hike. 

On the economic data front, year-ahead inflation expectations in the US, measured by the University of Michigan Surveys of Consumers, were revised slightly down to 4% in August 2026 from the preliminary estimate of 4.3% and below July's 4.2%. The reading marked a third straight monthly decline and the lowest level since March. Longer-run inflation expectations, measured over a five-year horizon, held at 3.3% for a third consecutive month, in line with the earlier estimates.

Dow Jones Industrial Average fell by 9.45 points or 0.02 percent to 53,559.99, Nasdaq declined by 138.92 points or 0.52 percent to 26,402.42 and S&P 500 was down by 19.23 points or 0.25 percent to 7,711.76. 

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