Warsh reiterated that the central bank was committed to bringing inflation down to its 2% goal, but said price risks had come down in recent weeks.
The remarks brought some relief for investors who have been worried about rate hikes by the Fed, especially as the latest data shows that the U.S. labor market remains stable, potentially giving the central bank more leeway to focus on price pressures.
Oil prices fell, with Brent crude down 2.1%, alleviating inflation concerns.
Traders still expect at least one hike from the U.S. central bank this year, according to data compiled by LSEG. Warsh again said he would not give forward guidance on the interest-rate trajectory.
Separately, data from the Institute for Supply Management also showed U.S. manufacturing activity had slowed in June but was still solid.
“A broadening recovery across manufacturing but not employment supports a cautious stance (from the Fed) as price pressures evolve,” said Richard de Chazal, macro analyst at William Blair.
At 11:51 a.m. ET, the Dow Jones Industrial Average (.DJI), rose 283.37 points, or 0.54%, to 52,602.57, the S&P 500 (.SPX), gained 12.21 points, or 0.16%, to 7,511.57, and the Nasdaq Composite (.IXIC), fell 81.22 points, or 0.31%, to 26,132.67.
In the second quarter of 2026, the S&P 500 and the Nasdaq Composite registered their best quarterly performance since 2020, while the Dow marked its best showing since 2022.
WAR RISKS PERSIST
Unease surrounding US-Iran tensions has cast a shadow over Middle East peace talks, setting a cautious tone for the second half of the year.
Tehran said it would not meet with top U.S. envoys who flew to the region following an outbreak of hostilities. Although a source with direct knowledge of the talks as well as an Iranian official said the U.S. and Iran held technical talks in Doha, contrasting rhetoric suggested a breakthrough may prove to be elusive.
Repeated false dawns have made the conflict difficult to track, leading some investors to focus instead on the economy’s underlying pillars.
Investors will now look for clues on the health of the labor market on Thursday, when the nonfarm payrolls report for June is due to be released.
Communication services (.SPLRCL), led the benchmark with gains of 2.5%, while the information technology index (.SPLRCT), fell 1.3%.
Semiconductors (.SOX), fell 5.3%, while software shares (.SPLRCIS), gained 3.8%.
Meta Platforms’ (META.O), shares jumped 9.8% after a report said the Facebook parent is building a cloud business to sell excess AI computing capacity.
Other movers included Shutterstock (SSTK.N), , which plunged nearly 29% after calling off its planned merger with Getty Images.
Kroger (KR.N), fell 1% after the grocer announced it would buy regional supermarket chain Giant Eagle in a $1.65 billion deal.
Advancing issues outnumbered decliners by a 1.48-to-1 ratio on the NYSE and by a 1.55-to-1 ratio on the Nasdaq.
Neither the S&P 500 nor the Nasdaq Composite posted any new 52-week highs or lows.
