VLADIMIR DUTHIERS:
00:00:00
In this morning's MoneyWatch, the Dow Jones Industrials fell more than 2% Wednesday. It is the worst day in more than a year, after the Federal Reserve decided not to raise interest rates to slow inflation down. Marketwatch correspondent Kelly O'Grady is here in studio with us. Kelly, good morning. Good morning. All right. So some of the biggest drivers of the growth in the stock market, AI stocks, not doing so well over the last couple of days. What's going on there? Yeah. I mean, I was at the New York Stock Exchange yesterday and I was talking to investors. And everyone was talking about AI, because that's a big reason why the stock market had such a big drop yesterday. Because there's this collective anxiety among investors that these companies are pouring tons of money into AI development and they're not going to see a return on investment. And you look at yesterday and today, four of the biggest companies in tech and AI are reporting their earnings. Meta missed the mark. And so it really of validated a little bit of that anxiety. The other two things, oil prices, of course, were surging yesterday with tensions in the Middle East. And then the Federal Reserve held interest rates steady but it wasn't unanimous. And so some investors are thinking we're looking at a September rate hike.
VLADIMIR DUTHIERS:
00:01:09
So you and I often say that-- you often tell me that what's equally important as to what the Fed Chair says is what he doesn't say or what he doesn't signal in his statements. What did you make of what he said yesterday? He was a little spicy.
VLADIMIR DUTHIERS:
00:01:22
Yeah, very. OK, Warsh is kind of spicy, the Warsh era. But he kept calling this a good family fight amongst the board. They meet for two days. They talk about all of these different things. Inflation, of course, has been a big concern. And I mentioned that that decision wasn't unanimous. I think what is brewing is if you see energy prices continue the way they are, you could see this family fight turn into a family blowout, if you will. And really, the Fed is caught between these two things. They don't want to hike rates too soon, but they don't want to wait too long and let inflation get into the economy more deeply. And Fed Chair Warsh, he was asked point blank, well, what are you going to do? And he said, we will not hesitate to act if necessary. That is why a September rate hike is on the table.
VLADIMIR DUTHIERS:
00:02:09
We will be watching. All right, Kelly, thank you, as always, friend.
