Wall Street Ends Week Mixed as Rate Cut Hopes Fade

MSCI’s global equities gauge lost ground on Friday and Wall Street had a muted end to the week while U.S. Treasury yields climbed after hawkish Federal Reserve officials trounced on hopes for a December interest rate cut.

After opening lower, the S&P 500 recouped most of its losses with some help from bargain hunters. This followed sharp declines in blue-chip bourses from Tokyo to Paris, while fresh concern about Britain’s upcoming budget added to pain in UK markets.

Citing inflation worries and signs of relative stability in the labor market after two U.S. rate cuts this year, a growing number of Fed policymakers have signaled reticence on further easing.

On Friday morning, kansas City Federal Reserve President Jeffrey Schmid pointed to concerns that “too hot” inflation goes well beyond the narrow effects of tariffs alone, suggesting a potential dissent in December if policymakers opted to cut rates.

In the afternoon, Dallas Federal Reserve President Lorie Logan signaled opposition to a December rate cut, having already opposed the Fed’s October cut on concerns inflation is too high.

After 43 days without official data due to a record-long U.S. government shutdown, traders reacted to the central bankers’ comments by pricing in a roughly 46% chance of a quarter-point cut next month, down from 66.9% last week, according to CME Group’s FedWatch tool.Still, the technology-focused Nasdaq clawed its way back.