US stocks close lower as Sept. rate-hike talk gains steam
U.S. stocks finished lower Tuesday, but off the session lows hit when one Federal Reserve president indicated a September interest-rate hike is likely unless there is a significant deterioration in the economy.
The Dow Jones Industrial Average DJIA, -0.27% finished down 47.51 points, or 0.3%, to close at 17,550.69, after being down nearly 93 points intraday.
The S&P 500 SPX, -0.22% slipped 4.72 points, or 0.2%, to 2,093.32, after being down as much as 9 points. The Nasdaq Composite Index COMP, -0.19% lost 9.84 points, or 0.2%, to finish at 5,105.55, after being down almost 23 points.
While stocks had been choppy for most of the session, they lurched lower after Federal Reserve Bank of Atlanta President Dennis Lockhart told The Wall Street Journal that “there is a high bar right now to not acting.” That was seen as a signal that Fed officials are serious about raising rates in September.
Among the day’s notable individual moves, shares of Apple Inc. AAPL, -0.56% closed down 3.8%.
Read: Apple’s stock drops below 2 bearish technical levels
Tuesday’s early-session was choppy following a weak session Monday, when all three stock averages closed firmly lower after disappointing U.S. economic data and a slump in oil prices. A report on manufacturing activity came in lower than expected, reigniting fears that growth in the world’s largest economy is losing momentum.
Last week’s lackluster wage-growth figures and a weak rise in consumer spending are weighing on investors’s minds, forcing markets into a sideways situation, said Randy Frederick, managing director at the Schwab Center for Financial Research, in a phone interview.
“It is a tough market for people to trade,” Frederick said.
Nicholas Colas, chief market strategist at Convergex, in a Tuesday note warned that “August is going to be a long and lonely month for U.S. equity markets.” The month is traditionally a slower month for activity as traders take summer vacations.
“Domestic stocks hover at the upper end of comfortable valuations, and market internals aren’t helping much to mitigate the volatility that comes with those high price/earnings ratios,” Colas said, suggesting that stocks may be more expensive than their fundamental performance can support.
Data due later this week could also dictate the future trading direction. On Friday, the top-tier nonfarm-payrolls report is due, which will be scrutinized for clues to the strength of the labor-market recovery. The Federal Reserve has said it is watching economic indicators—wages and employment numbers in particular—as it assesses when to hike interest rates.
source: Market Watch
