PrintS&P 500 Falls From Record High Following Fed Governor's Comments
BY MT Newswires | ECONOMIC | 10/09/25 04:54 PM EDT04:54 PM EDT, 10/09/2025 (MT Newswires) -- The S&P 500 and the Nasdaq Composite retreated from record highs as traders weighed remarks by a Federal Reserve official.
The S&P 500 lost 0.3% to 6,735.1, while the Nasdaq was down 0.1% at 23,024.6. The Dow Jones Industrial Average fell 0.5% to 46,358.4. Barring consumer staples, all sectors ended in the red, led by materials.
Federal Reserve Governor Michael Barr on Thursday underscored the possibility of tariffs-linked inflationary pressures becoming more persistent, urging policymakers to move cautiously on cutting interest rates further.
In prepared remarks for delivery at an Economic Club of Minnesota event, Barr projected the core personal consumption expenditure price index -- the Fed's preferred inflation metric -- will rise above 3% year over year by the end of 2025. The latest data showed annual core PCE inflation was 2.9% in August.
Importers and companies are holding off on passing through tariff costs to customers, mostly by temporarily lowering profit margins, Barr said.
"Normalizing margins over time implies a gradual, but longer, upward trajectory for inflation, a pattern of price increases that I fear could convince many consumers that higher inflation is going to be more of a permanent phenomenon," he said. "This is important because expectations of future inflation affect spending decisions in the near term and can drive a cycle of escalating inflation, as we saw after prices began rising in 2021."
Markets widely expect the Federal Open Market Committee to deliver a 25-basis-point rate cut later this month, following a similar move in September, according to the CME FedWatch tool.
On Wednesday, minutes from the Fed's September monetary policy meeting showed that most participants indicated it would be appropriate to further lower interest rates later this year amid growing concerns around the labor market. A few policymakers saw merit in holding interest rates steady last month due to renewed inflation concerns, according to the document.
"The pathway forward for policy appears increasingly uncertain and will depend on the evolution of both the employment and the inflation data, with the risks to both sides of the dual mandate elevated," Stifel Chief Economist Lindsey Piegza said in a note e-mailed Thursday. "While a material deterioration in the employment data could justify a further policy adjustment lower, still-elevated inflation is likely to limit any downside potential for rates.
US Treasury yields were higher, with the 10-year rate rising 2.4 basis point to 4.15% and the two-year rate adding 1.2 basis points to 3.6%.
The government shutdown entered its ninth day, delaying the weekly jobless claims report that was due on Thursday. The Senate failed to advance two funding bills on Thursday, one from Democrats and another from Republicans, media outlets reported.
West Texas Intermediate crude oil was down 1.8% at $61.37 a barrel Thursday late-afternoon trade. D.A. Davidson attributed falling oil prices to expectations of "easing" Middle East tensions.
In company news, Turkish Airlines could move a recent order for Boeing
AZZ (AZZ) shares declined 4.9%. The metal and coil coatings company's fiscal second-quarter results came in short of market estimates late Wednesday.
Delta Air Lines
PepsiCo
Gold was down about 2% at $3,991 per troy ounce, while silver decreased 2.7% to $47.69 per ounce.
MT Newswires does not provide investment advice. Unauthorized reproduction is strictly prohibited.
