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U.S. stocks fall on hawkish Fed comments; Dow dips 0.13%

Published 06/26/2014, 04:37 PM
Updated 06/26/2014, 04:40 PM
U.S. tocks dip on hawkish Fed comments

Investing.com - U.S. stocks fell on Thursday after a leading Federal Reserve official suggested interest rates could begin rising in early 2015.

At the close of U.S. trading, theDow 30 fell 0.13%, the S&P 500 index fell 0.12%, while the NASDAQ Composite index fell 0.02%.

The Volatility S&P 500 index, which measures the outlook for market volatility, was up 0.35% at 11.63.

St. Louis Federal Reserve President James Bullard told Fox Business Network earlier that an improving economy may make conditions ripe for interest rates to rise possibly in early 2015.

The Commerce Department reported Wednesday that U.S. gross domestic product contracted at an annual rate of 2.9% in the first quarter of the year, far surpassing consensus forecasts for a decline of 1.7%, though markets quickly brushed off the dismal numbers as a weather-related disappointment.

"I think the market's right to shake this off," Bullard told the network, describing the contraction as an "aberration."

"If you throw out the first quarter and just look forward over the next four quarters, most forecasters have 3%-plus growth."

Inflation, while still low, is on the rise and approaching the Fed's 2% target.

"My forecast actually has us moving through 2% and over 2% in 2015," which dampened stock prices by convincing many that rates may rise sooner than once expected.

Lackluster data kept many investors on the sidelines as well.

The U.S. Department of Labor said the number of individuals filing for initial jobless benefits in the week ending June 21 declined by 2,000 to 312,000 from the previous week’s revised total of 314,000.

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Analysts had expected jobless claims to fall by 4,000 to 310,000 last week.

A separate report showed that U.S. personal spending rose 0.2% last month, below expectations for an increase of 0.4%. Personal spending for April was revised to a flat reading from a previously reported decline of 0.1%.

Leading Dow Jones Industrial Average performers included Boeing Company (NYSE:BA), up 0.76%, Walt Disney Company (NYSE:DIS), up 0.65%, and Nike Inc (NYSE:NKE), up 0.49%.

The Dow Jones Industrial Average's worst performers included Wal-Mart Stores Inc (NYSE:WMT), down 0.93%, Procter & Gamble Company (NYSE:PG), down 0.88%, and Microsoft Corporation (NASDAQ:MSFT), down 0.70%.

European indices, meanwhile, ended the day largely lower.

After the close of European trade, the DJ Euro Stoxx 50 fell 0.62%, France's CAC 40 fell 0.47%, while Germany's DAX fell 0.64%. Meanwhile, in the U.K. the FTSE 100 rose 0.02%.

On Friday, the U.S. is to round up the week with revised data on consumer sentiment.

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