The U.S. stock market closed lower across the board on the heels of hawkish comments from Federal Reserve Chair Neel Kashkari. His remarks at the Jackson Hole Economic Symposium heightened concerns over inflation and raised the likelihood of a rate hike in September.
On August 29, according to Yonhap News (as of August 28 local time), the Dow Jones Industrial Average fell by 9.45 points (0.02%) to close at 53,559.99. The S&P 500 index dropped 19.28 points (0.25%) to finish at 7,711.76, while the Nasdaq Composite Index decreased by 138.93 points (0.52%) to end at 26,402.42.
The decline in the indices was driven by Kashkari's keynote address. Speaking at the symposium in Wyoming, he stated, "One of our responsibilities is to ensure price stability, and the relevant indicators are increasingly concerning."
He added, "We must have confidence that the underlying inflation rate is moving toward our target at a clear and sufficient pace; otherwise, we have work to do," leaving the door open for further rate hikes.
The market reacted immediately to the possibility of additional tightening from the Fed. According to the CME FedWatch Tool, the futures market for the federal funds rate reflected a 57.5% probability of a 0.25 percentage point increase in the benchmark rate from the current range of 3.50-3.75% to 3.75-4.00% at the upcoming Federal Open Market Committee (FOMC) meeting in September. This marks a significant rise from the previous day's 35.4% probability, well above the 42.5% chance of no change.
As expectations for a rate hike grew, U.S. Treasury yields and the dollar surged. Near the market close, the yield on the two-year Treasury note rose by 11.8 basis points to 4.348%, marking the largest single-day increase since March. The yield on the ten-year note also increased by 5.0 basis points to 4.72%. The dollar index, which measures the value of the dollar against six major currencies, climbed to 99.727 during the session, reaching its highest level since August 14.
* This article has been translated by AI.
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