US equities retreat to session nadirs as hawkish stance sinks in

The S&P 500 reversed its initial response to the Fed and dropped 21 points to 7709, hitting the session's weakest level.

A rumor is circulating that Warsh repeatedly used the term 'hikes' in his statement to disrupt algorithmic trading, though he only discussed physical hikes in the region. That might have triggered an odd market reaction, but my view is that traders initially piled into Nasdaq stocks regardless of the hawkish language. The logic draws from the prior cycle, when rate increases didn't weigh on technology shares due to low corporate debt levels. I no longer see that as applicable given the $3 trillion AI buildout, but the market behaves like a conditioned animal.

Or at least it did for a while, as tech now lags behind utilities—which is the expected pattern when yields rise.

I also suspect some month-end portfolio adjustments are mixing into the activity, but the equity slide aligns with the hawkish repricing seen elsewhere, which has produced:

• Gold falling
• The dollar strengthening
• Treasury yields climbing

In fact, those moves are all accelerating right now. The focus then shifts back to data with ISM manufacturing and JOLTS on Thursday, ADP on Wednesday, ISM services on Thursday, and non-farm payrolls on Friday.