Every good story needs a main character.
Kevin Warsh became that character as he held his first press briefing as Federal Reserve chair. The stock market sold off, reversing earlier gains, as he expressed his determination to fight inflation, and the official Fed statement — what there was of it — indicated that interest rates will likely be raised at some point later this year.
Ahead of Warsh’s first Fed meeting, all four major indexes — the S&P 500, the Dow Jones Industrial Average, the Nasdaq composite and the Russell 2000 Index of small-cap stocks — were briefly headed for their best Fed decision day since Dec. 10, 2025, according to Dow Jones Market Data, before the selloff began in the afternoon.
In that sense, the market reaction to Warsh’s first press briefing was actually pretty similar to those of his predecessor, Jerome Powell.
Yet a look at the S&P 500’s performance under different Fed regimes going back to the early 1930s suggests that Warsh and his predecessors typically have had less influence than historical events on the stock market, according to an analysis by Deutsche Bank.
“Consider Eugene Meyer grappling with the 1930s Depression, or Eugene Black and Marriner Eccles benefiting from their appointments in 1933 and 1934, respectively,” Jim Reid, global head of macroeconomic research and thematic strategy at Deutsche Bank, wrote in a Wednesday client note.
Photo: Deutsche Bank, Bloomberg
“Arthur Burns, on the other hand, had to navigate the tumultuous shocks of the 1970s. Even Alan Greenspan faced a challenging initial period, with his tenure famously beginning in the weeks before the 1987 crash,” Reid wrote.
Stocks were mixed but near record highs ahead of Wednesday’s Fed decision, before reversing into the red. President Donald Trump has been vocal about wanting lower interest rates. But even though Trump picked Warsh to lead the Fed, fed funds futures are pricing in zero chance of a rate cut as of the end of the year, given that inflation is running above 4%, well above the central bank’s 2% target.
A look at recent history shows the S&P 500 was volatile on Fed decision days during Jerome Powell’s tenure as chair. He led the U.S. central bank’s emergency response to the 2020 pandemic, the subsequent rate hikes as inflation surged to a 40-year high and the path back down to more neutral rates in 2024 and 2025.
Since 2024, the S&P 500 has demonstrated a familiar pattern on Fed decision days: early gains followed by an afternoon selloff as the press conference got underway, according to Dow Jones Market Data.
Since 2024, the stock market tended to start higher on Fed decision days but to end the session lower after Fed Chair Powell’s press conferences. Photo: Dow Jones Market Data
