US STOCKS slid for a second consecutive day yesterday after comments from a pair of US Federal Reserve officials left investors uncertain about the timing of a possible reduction in its bond-buying programme.
Dennis Lockhart, president of the Federal Reserve Bank of Atlanta, said the Fed could begin trimming the size of the stimulus programme as soon as September, but might wait longer if the expected economic growth in the year’s second half fails to materialise.
Later in the session, Chicago Fed president Charles Evans echoed the sentiment when he said the Fed will probably decrease quantitative easing later this year and could do so as early as next month, depending on the economic data.
One catalyst for Monday’s downturn in the Dow and the S&P 500 was provided by Richard Fisher, president of the Federal Reserve Bank of Dallas. He said he supported scaling back the Fed’s stimulus next month unless economic data takes a turn for the worse.
The S&P 500’s decline yesterday was its biggest fall since 24 June as investors continued to take profits from the recent rally that drove the Dow Jones industrial average and the benchmark S&P to back-to-back record closing highs late last week.
The Dow Jones industrial average fell 93.39 points or 0.60 per cent, to end at 15,518.74. The S&P 500 declined 9.77 points or 0.57 per cent, to 1,697.37. The Nasdaq Composite dropped 27.182 points or 0.74 per cent, to 3,665.77.
Earlier, the Dow fell as low as 15,473.40, while the S&P 500 touched a session low of 1,693.29, and the Nasdaq hit an intraday low of 3,654.672.
The S&P 500 has risen for five of the past six weeks, gaining more than seven per cent over that period.