U.S. stocks closed lower, Mondy, but pared early losses after Federal Reserve officials made dovish comments following last week's statement by chairman Ben Bernanke regarding the wind down of the Fed's monetary stimulus.
Stocks on Wall Street had dropped sharply at the open, with the Dow Industrials falling nearly 250 points following a massive selloff in China triggered by hawkish statements from the country's central bank and downgraded expectations of the country's growth by investment powerhouse Goldman Sachs.
Lots Of Fed Talk
Stocks started to pare losses as the session continued after Minneapolis Fed President Narayana Kocherlakota suggested that although there is talk of a cut in QE, there are no hardened plans to do so. Also, New York Fed President William Dudley said that Fed policy, while aggressive by historical standards, is not sufficiently accommodative.
In economic news, the Dallas Fed index of manufacturing activity jumped to 6.5 from -10.5 in May, much better than the expected 0.0 in June. This helped confirm market expectation that an improved economic environment will encourage the Fed to pare back QE.
Europe And Asia
In Europe, stocks ended lower, falling in sympathy with the Asian markets. The three major bourses all suffered double digit losses. The sell-off came on the heels of statement published in China's newspapers claiming the central bank in China will continue to keep monetary policy restrictive. Since most statements in Chinese newspapers must be approved by the government, the news was taken as coming directly from the central bank.
In commodities, the metals ended sharply lower while oil reversed from earlier gains to close in positive territory. Gold ended down 1.2%. Copper shed 2.29%, and platinum 2.95%; both metals traded around three-year lows Monday.
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