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Stocks Fall as Fed Officials Cast Doubt on Cuts

Stock MarketsAug 22, 2019 01:08PM ET
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© Reuters. Stocks Fall as Fed Officials Cast Doubt on Cuts: Markets Wrap

(Bloomberg) -- U.S. stocks fell after Federal Reserve officials cast doubt on further interest-rate cuts and as traders assessed mixed economic data. Treasuries fluctuated.

An early advance in the S&P 500 Index began to lose strength after a report showing a contraction in U.S. factory activity offset solid labor-market data. Equities erased gains after Philadelphia Federal Reserve President Patrick Harker told CNBC that he’s “on hold” right now for further monetary easing. His comments were in line with those of Kansas City counterpart Esther George, who said the U.S. doesn’t need lower rates.

Euro-area government bonds slumped after the European Central Bank expressed concern that investors were losing faith in the institution’s ability to revive inflation and as a measure of German manufacturers reinforced recession concern. The British pound jumped as comments by French and German leaders stoked optimism about a Brexit deal.

Read: Trump Sees Germany’s Negative-Bond Sale as Positive, Bashes Fed

Financial markets have been volatile amid concern over global economic weakness and renewed U.S.-China trade tension. Minutes from the Fed’s July meeting showed Wednesday that officials viewed their cut last month as insurance against too-weak inflation and the risk of a deeper slump in business investment. Analysts expect Powell to suggest the central bank is ready to reduce rates further when he delivers his speech in Jackson Hole Friday.

“It’s just been news driven primarily based on trade wars and the Fed,” said Ed Clissold, chief U.S. strategist at Venice, Florida-based Ned Davis Research Inc. “Fundamentally there’s not a lot going on. Earnings growth has been pretty anemic, economic growth has not been strong. In the vacuum of good fundamentals, the market’s just been held to the whims of the news flow.”

Here are some notable events coming up:

  • Kansas City Federal Reserve Bank hosts its annual central banking symposium in Jackson Hole, Wyoming, starting Thursday.
Here are the main moves in markets:

  • The S&P 500 lost 0.3% to 2,914.25 as of 11:18 a.m. New York time.
  • The Stoxx Europe 600 Index declined 0.5%.
  • The MSCI Asia Pacific Index fell 0.4%.

Stocks Fall as Fed Officials Cast Doubt on Cuts
 

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gordon gamwell
RetiredIT Aug 22, 2019 3:33PM ET
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The Fed should be raising rates.  Savers are getting cheated.  The low rates give a windfall profit to bond holders at the expense of Main Street common people.  House prices are inflated, the stock market is inflated and the bond market is inflated.  Savings accounts pay nothing and young people have no where to go.  They have been priced out of buying a new home, they have no where to save the money they earn and the Fed and Central banks have ruined all the western economies.  All the money from lower rates goes to bond holders and to stock buybacks and the richest of the rich.  Stop the stealing - Stop the Fed.  Congress should take the power away from the Fed.  Legislate that they can not lower rates below the current rate  of inflation.
gordon gamwell
RetiredIT Aug 22, 2019 3:32PM ET
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We have negative rates in America.  Inflation is at 2.5 percent and you get 1.5% for loaning your money to the Federal government for 10 years.  That's a negative half of percent you lose each year.   The Fed should not be able to lower rates below the rate of inflation.
Andrew carson
Andrew carson Aug 22, 2019 12:55PM ET
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The new SQUAD?!
Ivan Couto Jr
Ivan Couto Jr Aug 22, 2019 11:42AM ET
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seriously? not a word abou Fed concerns with overvaluated stocks and high and bad debt of non-financial institutions?..how much market pay to hide this stuff?
 
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