US Stocks End Lower on Rate Hike Talk

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US Stocks End Lower on Rate Hike Talk

US stocks ended lower while the US Dollar ended higher after a top Federal Reserve official suggested that a September rate hike was highly likely unless the economy underwent significant deterioration.

The Dow Jones Industrial Average ended 47.51 points or 0.3% lower at 17,550.69 points after falling by more than 93 points during the day.

The benchmark S&P 500 Index ended 4.72 points or 0.2% lower at 2,093.2 points after falling by as much as 9 points earlier.

The tech heavy Nasdaq Composite ended 9 points 0.2% lower at 5,105.5 to partly recover from its intraday low.

“August is going to be a long and lonely month for U.S. equity markets. The month is traditionally a slower month for activity as traders take summer vacations,” Nicholas Colas, chief market strategist at Convergex, told Market Watch.

“Domestic stocks hover at the upper end of comfortable valuations, and market internals aren’t helping much to mitigate the volatility that comes with those high price/earnings ratios,”

The Federal Reserve Bank of Atlanta President Dennis Lockhart, one of the members of the Federal Reserve policy committee, told the Wall Street Journal, that his view in support of a September monetary policy tightening would take only a significant deterioration in the economy to change.

“Until [the Fed raises rates], it’s just going to be constant speculation,” Kenny Polcari, director at O’Neil Securities, told the Wall Street Journal. Mr. Polcari added that even a quarter-percentage-point increase wouldn’t be enough to dissuade investors from favoring stocks.

“Just because they’re going up to 25 basis points doesn’t mean they’re going to 8%,” Mr. Polcari said. “Twenty-five basis points is not going to destroy anyone. I think it’s too minimal.”

Investors have been analyzing economic data ranging from unemployment figures to wage bills and corporate earnings on clues on when the Federal Reserve could commence raising the country’s interest rates for the first time on more than a decade.

To contact the reporter of the story: Samuel Rae at samuel@forexminute.com