Kevin Warsh had a very thin tightrope to walk yesterday: get too dovish, and risk his credibility with the bond market; but get too hawkish, and stocks would get sad. At first, it seemed like he tipped too far into the hawkish side as the S&P fell to the lowest close since July. By Thursday morning, traders had decided they were over it.
The Nasdaq rallied over 400 points, or 1.6%, the S&P rallied more than 1%. The Dow added 224 points, or 0.4%, which is not nothing after it fell more than 630 points the day before. The whole thing lasted about as long as a hangover.
