# Fed's hawkish signal sends stocks tumbling

> Chair Kevin Warsh hints at more rate hikes ahead, rattling markets that hoped for a pause.
- Title: Fed's hawkish signal sends stocks tumbling · Fortune
- Summary: Chair Kevin Warsh hints at more rate hikes ahead, rattling markets that hoped for a pause. The Fed signaled it may keep raising rates beyond the initial…
- Keywords: federal reserve, kevin warsh, interest rates, stock market decline, s&p 500, treasury yields, monetary policy, rate hike, inflation, financial markets, Fed's, hawkish
- Source: Fortune — https://fortune.com/2026/09/16/warsh-fed-hike-ai-hyperscalers-treasury-yields
- Author: Eva Roytburg
- Read time: 1 min
- Topics: federal reserve, kevin warsh, interest rates, stock market decline, s&p 500, treasury yields, monetary policy, rate hike, inflation, financial markets
## Stocks plunge after Fed rate hike
The S&P 500 dropped 1% Wednesday as the Fed raised rates for the first time in three years. The Dow fell 1.7% with financial stocks leading losses.
## Warsh signals more hikes coming
Fed Chair Kevin Warsh said financial conditions aren't restrictive enough, implying the quarter-point hike may not be the last. He declined to endorse the Fed's own forecast of just one more hike this year.

> I would be hard pressed to describe broad financial conditions as restrictive.
## A shift from Powell's approach
Under Jerome Powell, the Fed called policy modestly restrictive. Warsh instead said they removed accommodation, a new framing that suggests rates at 3.5% to 3.75% still aren't high enough.
## Traders brace for October hike
Fed funds futures now show traders split on whether the next hike comes in October. Economists at LPL Financial warn cuts may not arrive until 2028 if the economy stays strong.

> If the economy keeps up like it has, the Fed is telling us that we may not see a cut until 2028.
## Bond yields hit 2007 highs
The 10-year Treasury yield held near 5%, touching its highest level since 2007. The dollar index climbed to its strongest level since late July.
## Some economists see just one more hike
Michael Pearce at Oxford Economics expects one more hike and then a stop, arguing markets have priced in too much tightening. But history shows the Fed typically hikes multiple times once it starts.

> We don't think this is the beginning of another major tightening cycle.
## Key takeaway

The Fed signaled it may keep raising rates beyond the initial quarter-point hike, disappointing investors who expected a one-time adjustment.