Wall St closes worst month in three years – New York Report
WALL Street wrapped up its worst month since 2012 yesterday on a sour note after comments from a senior Federal Reserve official heightened fears among investors of a potential US interest hike in September.
The Dow Jones industrial average lost 0.69 per cent to end at 16,528.03 points and the S&P 500 fell 0.84 per cent to 1,972.18. The Nasdaq Composite dropped 1.07 per cent to 4,776.51.
Fed vice chairman Stanley Fischer on Saturday said US inflation would likely rebound as pressure from the dollar fades, allowing the Fed to raise interest rates gradually.
Many analysts took Fischer’s comments as a sign the Fed would raise rates in September, instead of December. That shook investors who were already jumpy after weeks of turbulence caused by concerns over a stumbling Chinese economy.
“What you see in the market today is caused by Fischer’s comments over the weekend. If they move in September, it’s going to cast a lot of doubt about where they will stop,” said Stephen Massocca, chief investment officer at Wedbush Equity Management.
Fischer’s remarks at the global central banking conference in Jackson Hole, Wyoming suggested the Fed does not see the recent stock market drop and concerns about China as reasons that would keep it from raising rates.
A decade of near-zero interest rates has helped the US stock market stage a spectacular bull run since the financial crisis and investors are worried those gains many end once rates start to climb.