Fed Chair Kevin Warsh just slammed the door on rate cut hopes, and stocks barely blinked.

The Dow hit a fresh record. The S&P 500 keeps climbing toward all-time highs. But beneath the surface, something's breaking: private sector hiring collapsed to 98,000 jobs in June, the worst miss in months. Core PCE inflation hit 3.4% in May, and the Fed revised projections sharply upward to 3.6% headline and 3.3% core.

Speaking at the ECB forum, Warsh made it clear: the Fed will not tolerate inflation running above 2%, and President Trump's rate cut desires don't matter. The Fed is "going to be an independent central bank."

The contradiction is brutal. Stocks are celebrating all-time highs while the job market softens and the Fed doubles down on hawkishness. Meta surged 10% on cloud compute plans, but the broader labor market is deteriorating. The Fed is tightening into a weakening economy.

This is the tension that will define the rest of 2026. Does the job market break hard enough to force early rate cuts? Or does inflation stay sticky enough to keep the Fed on hold? Thursday's employment report arrives a day early due to the July 4th holiday, and it might be the most important print of the quarter.

Today:

📰 Market Headlines: Warsh reaffirms hawkish stance, ADP hiring misses, Meta surges
🤖 AI/Tech: Together AI raises $800 million, Google brings Gemini to Mac
💼 Market Movers: Kroger acquires Giant Eagle, Toyota bets on air taxis

Let's get started.

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Fed Chair Kevin Warsh doubled down on the central bank's hawkish stance on Wednesday, making it crystal clear: if you thought the Fed would tolerate inflation running above its 2% target, you're going to be disappointed. Speaking at the ECB forum in Portugal, Warsh reaffirmed the Fed's commitment to price stability and, when pressed about President Trump's desire for lower rates, insisted the Fed is "going to be an independent central bank" with "no changes" to that independence.

The real numbers backing his hawkishness: the Fed's preferred inflation gauge (core PCE) hit 3.4% in May, the highest since October 2023. Fed officials just revised inflation projections upward too, now seeing headline inflation at 3.6% and core at 3.3%, both significantly higher than their previous forecasts of 2.7%. Warsh also emphasized he wants a smaller Fed balance sheet and prefers interest rates as the primary policy tool, suggesting no pivot toward quantitative easing or other experimental measures.

But the thing is, Warsh dodged every question about rate timing and AI's inflation impact, saying he's "meeting in four weeks" and doesn't want to give forward guidance. Translation: the Fed is either still in debate mode or Warsh is going to remain tight-lipped outside of FOMC meetings.

The takeaway overall though is that Warsh is signaling a hawkish, inflation-focused Fed that won't be pushed around by politics. We’ll see, though, if dropping oil prices change things for inflation (and for rate cut possibilities!).

US stocks slipped Wednesday as semiconductor stocks dragged down the tech-heavy Nasdaq and investors parsed Fed Chair Kevin Warsh's latest comments on inflation.

Warsh reaffirmed his inflation-fighting credentials at the ECB forum in Portugal, stating that "prices are too high" but offering no forward guidance on rate cuts. Markets bounced off session lows following his remarks, which reinforced the Fed's commitment to price stability without signaling any imminent policy shifts.

Private sector hiring slowed more than expected in June. ADP reported companies added just 98,000 jobs, down from 122,000 in May and below the 110,000 forecast. Nearly half the gains came from education and health services, while leisure and hospitality added only 2,000 positions. The tepid hiring sets the stage for Thursday's official jobs report, which arrives a day early due to the July 4th holiday.

Meta surged 10% earlier this week after Bloomberg reported the company plans to launch a cloud business selling excess AI compute capacity. The move would pit Meta directly against Amazon, Microsoft, and Alphabet in the cloud computing market. Meta has spent aggressively on AI infrastructure this year, and the new business line could help offset some of the $125 billion to $145 billion in capital expenditures the company announced for 2026.

Iran-US peace talks stumbled in Qatar as Iranian delegates refused to meet with President Trump's negotiating team. The setback clouded hopes for a diplomatic breakthrough that would normalize oil flows through the Strait of Hormuz. Oil prices reversed earlier gains to drop roughly 1%, with Brent crude falling below $72 per barrel. Despite the diplomatic hiccup, oil shipments through the strait surged past 10 million barrels as US military escorts boosted security.

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