The Dow Jones industrial averaged closed down 53 points. (MCD) led blue-chip decliners.
Advertisement
As Yellen’s speech was broadly regarded as the weekly highlight, traders opted for a wait-and-see approach earlier this week, with the pair dwelling in a tight range of approximately 100 pips for the last four sessions. Utilities and phone companies, the year’s best performers, led the declines. The trade-weighted index fell to 77.14 from 77.54.
The Standard & Poor’s 500 index slipped 3 points, or 0.2 percent, to 2,169. The Nasdaq was eyeing a nine-week winning streak.
Stein, now a Harvard economics professor, proposed that the Fed keep a permanently large balance sheet at around $4.5 trillion as a way to bolster stability, while Carnegie Mellon University professor Marvin Goodfriend urged that negative interest rates be part of the central bank’s toolkit.
Stocks were mostly lower on Wall Street at midday, giving up a modest gain following a generally upbeat assessment of the economy from Fed Chair Janet Yellen.
Yellen’s speech at the Jackson Hole central bankers retreat was the most anticipated event of the past week and she used it to say the case for an increase in the federal funds rate “has strengthened in recent months”, without giving details.
Gold is highly-sensitive to rising US interest rates, which increase the opportunity cost of holding non-yielding bullion while boosting the dollar, in which it is priced.
Stocks have benefited from a protracted period of ultraloose monetary policy.
Interest rate futures indicated the market priced in more than a 30 percent chance of a hike in September from 18 percent before Yellen and Fischer spoke, according to CME Group’s FedWatch tool.
Asked on CNBC whether a rate increase in September and more than one policy tightening before year end should be expected, Fischer said Yellen’s comments were “consistent with answering yes” to both questions, albeit still data-dependent.
“The appointment of Urjit Patel as the successor of Raghuram Rajan was in general perceived to be a good move by the government, but it also raised market concerns that the hawkish RBI stance on interest rates will continue”, said Pankaj Sharma, Head of Equities, Equirus Securities. “In this way, the market will be prepared for a rate hike in December”.
“He didn’t rule out the possibility of a rate increase in September”, said Mr. Fujiwara.
The pound fell to US$1.3135 from US$1.3187.
Autodesk managed a small profit, beating expectations of a loss, and Pure Storage’s loss was far smaller than forecasts.
Brent crude futures was trading at $49.58 a barrel. European stocks also tilted up after oil turned positive, while Asia closed mixed. After sharp swings, the USA dollar was a little stronger against the euro at $1.1224 and also rose against the yen at 101.39 yen.
Other economic reports: Meanwhile, the trade gap narrowed (http://www.marketwatch.com/story/us-trade-gap-narrows-in-july-advance-report-shows-2016-08-26) to a seasonally adjusted $59.3 billion in July from $64.5 billion in June, the Commerce Department said Friday.
Advertisement
The comments sent stocks in the US lower on Friday, helping the market there notch its largest weekly decline since the U.K.’s vote to leave the European Union in June.
