He said on Friday that the US central bank could resume gradual rate increases as the risks facing the economy are more in balance, reigniting Wall Street’s fears about the end of easy-money policies.
Advertisement
USA stocks were down sharply in late-afternoon trading Friday, pulling the Dow Jones industrial average down more than 300 points and placing the market on course for its biggest loss since June. Energy stocks slumped as crude oil prices fell.
USA stocks fell the most since Britain voted to leave the European Union, after a Federal Reserve official signaled more willingness to raise interest rates.
“We have a good probability that we’re getting it by the end of the year”, Kinahan said.
The Dow lost 394.46 points, or 2.1%, to 18,085.45. The Nasdaq composite index lost 133.57 points, or 2.5 percent, to 5,125.91.
USA stocks have rallied to records in the last two months after plunging following the June 23 British vote to exit the European Union.
Before Friday, when the Standard & Poor’s 500-stock index fell 2.45 percent, markets had remained fairly steady since early July. But Friday’s sell-off puts the market more in sync with a Fed move sometime in 2016.
U.S. stocks ended sharply lower on Friday as well as the week after a Boston central banker’s hawkish comments and tumble by oil prices soured the session.
Federal Reserve Bank of Boston President Eric Rosengren moved more firmly into the camp of hawkish policy makers, warning that waiting too long to raise interest rates threatened to overheat the USA economy and could risk financial stability. Fed policy makers are next due to meet on September 20-21, meaning a rate hike could occur as soon as this month. In recent weeks, few Fed observers have expected it to lift rates this month, speculating that a December hike is more likely, said Bill Northey, chief investment officer of the Private Client Group at US Bank. The yield on the 10-year Treasury bond ticked up as high as 1.675, its highest level since June 24, when shocked markets reacted to the Brexit vote a day earlier. Meanwhile, higher rates encourage investors to buy interest-bearing assets, eschewing commodities, stocks, and foreign currencies. Great Britain’s FTSE 100 index fell 1.19 percent, while France’s CAC 40 was down 1.12 percent.
Oil prices closed lower after rallying a day earlier. Benchmark U.S. crude fell $1.74, or 3.7 percent, to close at $45.88 a barrel. Brent crude, used to price worldwide oils, was down $1.61, or 3.2 percent, at $48.38 a barrel.
DRILLED: Several oil and gas production and drilling companies were down, giving back some of their gains from a rally Thursday. Diamond Offshore Drilling led the decliners in the S&P 500, losing 1.80 dollars, or 10.3%, to 15.60 dollars.
Among metals, gold slid $7.10 to $1,334.50 an ounce, while silver fell 31 cents to $19.37 an ounce.
“They [the Fed] want to show that they are not guided by the markets”, the fixed-income money manager told investors during his Thursday night webcast. Specifically, the fund’s portfolio is comprised of euro, yen, Canadian dollar, Mexican peso, pound sterling, Australia dollar, franc, South Korean won, Chinese yuan and Brazilian real. News stories displayed here appear in our category for Business and are licensed via a specific agreement between LongIsland.com and The Associated Press, the world’s oldest and largest news organization. This includes the preparation of derivative works of, or the incorporation of such content into other works.
Advertisement
“I’ve been characterized as being in the show-me camp, which is to say I would like to see more tangible evidence of inflation”, Tarullo said.
