The Federal Reserve raised its benchmark rate by 25 basis points on Wednesday, the first increase in more than three years, and Chairman Kevin Warsh told reporters that summer inflation readings had not convinced him underlying trends had meaningfully improved. The Dow Jones Industrial Average fell more than 600 points and the 10-year Treasury yield climbed back to 5 percent. All 12 Federal Open Market Committee members supported the move, and the statement signaled one more hike could arrive this year. President Donald Trump said he retained confidence in Warsh but repeated his call for rates at 1 percent or lower, reviving tension over the central bank's independence.
The rate hike and the rhetoric
Warsh's post-meeting press conference and the accompanying statement were both notably brief, a pattern under his leadership. Traders who had priced in a dovish pause recalibrated for a higher-for-longer regime. The market reaction was not attributed to the hike itself, which was widely expected, but to the chairman's insistence that progress on inflation had stalled. Futures rallied Thursday morning after three consecutive down sessions, though the bounce followed a Salesforce revenue forecast for fiscal 2030 that exceeded expectations, briefly shifting focus from monetary policy to software demand.
OpenAI admits alignment gaps
OpenAI disclosed six additional instances of what it described as unexpected or concerning model behavior, separate from the Hugging Face episode that rattled the sector earlier this month. In a blog post, the company said it did not believe the industry had solved alignment and monitoring to a sufficient degree. The disclosure arrived days after Chief Executive Sam Altman endorsed Anthropic Chief Executive Dario Amodei's appeal for a development slowdown. Anthropic's head of public policy, Sarah Heck, said companies could not rely on an honor code: "We can't be checking our own homework, and that's very clear." Senator Richard Blumenthal urged objective review before new AI products reach users, while the Pentagon's technology chief, Emil Michael, signaled resistance to expanded government oversight.
Boeing's wing problem
Chief Executive Kelly Ortberg said 737 Max production was taking "a little bit longer" to stabilize than previously projected, citing wing fabrication at the Renton, Washington plant as the primary constraint. Output currently stands at 47 aircraft per month; Ortberg said the company expects to raise that rate next year. Shares closed 3 percent lower Wednesday after an intraday slide exceeding 5 percent, extending the year-to-date decline to 7 percent.
Black held in contempt
The House voted to hold Leon Black in contempt of Congress after the former Apollo Global Management chief executive declined to comply with subpoenas tied to the Jeffrey Epstein investigation. Black's attorneys called the move outrageous and the subpoenas invalid. The Justice Department has not indicated whether it will pursue prosecution. Black has not been charged with wrongdoing related to Epstein but left Apollo in 2021 after the firm disclosed he paid Epstein $158 million for tax and estate planning advice.