The Federal Reserve has officially entered the "Powell Era," with Market Rate Hike Expectations Rising

May 23. On May 22 U.S. Eastern Time, the three major U.S. stock indexes closed higher across the board: the Dow Jones Industrial Average climbed 0.58% to notch another all-time record, the S&P 500 notched its eighth consecutive weekly gain, and the Nasdaq Composite rose 0.19%. Chip stocks and quantum computing concept shares surged broadly, with the Philadelphia Semiconductor Index rallying nearly 2% to hit a new all-time high. Notable movers: Qualcomm surged over 11%, while Credo Technology and Sijiaxun each jumped more than 12%. In the quantum computing space, Rigetti Computing rallied over 19%, D-Wave Quantum rose over 14%, and IonQ gained more than 8%. Market risk appetite picked up, fueled by rising expectations of easing Middle East tensions. Reports indicate Qatar has dispatched a negotiation team to Tehran to help broker a U.S.-Iran agreement; Pakistan’s Army Chief General Asim Munir has also arrived in Iran to mediate. President Trump recently stated that Iran “will never obtain nuclear weapons” and that “this situation will end very soon.” Separately, U.S. President Trump convened a senior national security team to discuss the Iran issue. Sources familiar with the matter said if negotiations fail to make progress, the U.S. is seriously weighing new military strikes against Iran. Signs of de-escalation in the Strait of Hormuz also emerged: U.S. officials confirmed there is currently no evidence of Iran laying mines, and no reports of merchant vessels being targeted. With safe-haven demand cooling, U.S. Treasury yields fell, and international oil prices pulled back after an initial spike. Meanwhile, Kevin Warsh was formally sworn in as Federal Reserve Chairman, marking the official start of the “Warsh era” at the central bank. Warsh said he will lead a “reform-oriented” Fed, emphasizing that he will fulfill the Fed’s dual mandate—controlling inflation and achieving full employment—with “independence, clear judgment, and a firm stance.” During the swearing-in ceremony, President Trump expressed his hope that Warsh would be a “completely independent chairman,” while also stressing that he does not want to “undermine economic prosperity while taming inflation.” With Warsh’s appointment and a recent uptick in inflation expectations, market bets on the Federal Reserve hiking rates further have jumped sharply. CME Group’s FedWatch Tool shows traders currently peg a roughly 70% probability of another rate increase by 2026, compared to earlier this year when the market broadly anticipated an interest rate cut cycle.