In a speech earlier Monday, Dennis Lockhart, president of the Fed’s regional bank in Atlanta, said he still held the view he expressed last month at a Fed gathering at Jackson Hole, Wyo., that economic conditions justified consideration of a rate hike in September. The biggest gains went to safe investments that pay big dividends, as they are more enticing to investors when interest rates and bond yields are low.
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ASIA’S DAY: Earlier, Asian stocks mostly rallied.
Financial markets had been on edge after several Fed officials in recent days had signaled a willingness to resume raising rates when they meet next week.
The stock was the only gainer on the Dow and chiefly responsible for the tech sector falling the least, 0.25 percent, among the 10 major S&P sectors.
Brainard is among the Fed’s top “doves” – officials who tend to think the central bank should be cautious about raising rates out of concern that higher rates could stifle borrowing, spending and growth. Hong Kong’s Hang Seng index gained 0.8 percent to 23,482.47 while Australia’s S&P/ASX 200 was up 0.1 percent to 5,222.00. The economy expanded at an unimpressive 1.1 percent annual pace from April through June after growing just 0.8 percent in the first quarter and 0.9 percent in the fourth quarter of 2015.
Comments from Fed officials in the past few weeks had raised speculation of a US rate increase this year and the European Central Bank and Bank of Japan recently refrained from further monetary policy easing, fueling Friday’s broad stocks selloff and rise in bond yields.
The recent surge to record highs have left stock with high valuations.
The British currency recently traded at $1.3201, compared with $1.3335.
Markets overseas took sharp losses following the rout in the U.S. Friday. Japan’s Nikkei 225 gained 0.3 percent to 16,729.04 and South Korea’s Kospi rose 0.4 percent to 1,999.36 as Samsung Electronics, in the midst of a recall of its Galaxy Note 7 smartphones, gained 4.2 percent, recovering more than half of Monday’s loss. The Shanghai Composite index inched back into positive territory, gaining 0.1 percent to 3,023.51. And the unemployment rate has dropped to a healthy 4.9 percent.
“Disinflation pressure and weak demand from overseas will likely weigh on the USA outlook for some time, and fragility in global markets could again pose risks here at home”, she added.
Commodities were mixed as the December gold contract fell US$8.90 to US$1,325.60, while the October crude oil contract gained 41 cents at $46.29 per barrel. On the Nasdaq, 1,748 issues fell and 486 advanced. The December copper contract was up a penny to US$2.10 a pound.
Rumors of the expanded USA rates caused the dollar to appreciate against the pound, euro and yen on Friday, but the American currency leveled back on Monday.
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A barrel of benchmark crude was down $1.10, or 2.4 percent at $45.20 while Brent crude, the worldwide standard, fell 93 cents, or 1.9 percent, to $47.42 a barrel.
