S&P 500 at lowest since March as rate fears set in
The S&P 500 was heading for its lowest close in two months
on Thursday as Wall Street became more worried that the US Federal
Reserve might raise interest rates as early as June.
The timing of future rate hikes by the Fed in the face of a
sluggish economy is a major ongoing concern among stock investors
who have benefited from historically low borrowing costs since the
2008 financial crisis.
In a new blow to Wall Street's confidence, New York Fed President
William Dudley said on Thursday the US economy could be strong
enough to warrant an interest rate increase in June.
That followed the release on Wednesday of minutes from the Fed's
April meeting that showed most policymakers thought a June rate
hike was appropriate, surprising many investors who had expected
policymakers to wait until September due to a lackluster economic
recovery.
Higher rates choke inflation but also hamper economic expansion and
reduce liquidity in stock markets.
"I know they have 150 PhD economists over there who are probably
smarter than I am, but they're misreading the situation," said
Donald Selkin, chief market strategist at National Securities in
New York. "This, to me is, the worst possible thing they can
do."
Six of the S&P 500's sectors were lower, led down by a 1.1
percent loss in industrials .SPLRCI.
The S&P 500's dip put it on track for its lowest close since
mid-March and left it down 0.5 percent for 2016.
At 2:55 pm, the Dow Jones industrial average .DJI was down 0.69
percent at 17,406.16 points and the S&P 500 .SPX had lost 0.65
percent to 2,034.41.
The Nasdaq Composite .IXIC dropped 0.9 percent to 4,696.38.
Microsoft (MSFT.O) fell 1.36 percent and weighed most on the
S&P 500.
Dow component Wal-Mart's (WMT.N) shares surged 9 percent after the
retailer's first-quarter results beat analysts' estimates.
Cisco Systems (CSCO.O) rose 3.5 percent after the network equipment
maker reported better-than-expected results.
Monsanto (MON.N) gained 4.26 after disclosing German group Bayer
made an unsolicited takeover proposal.
Declining issues outnumbered advancing ones on the NYSE by 2,299 to
703. On the Nasdaq, 2,012 issues fell and 748 advanced.
The S&P 500 index showed six new 52-week highs and four new
lows, while the Nasdaq recorded 14 new highs and 71 new lows.
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