United States stocks fell on Monday as comments by a Federal Reserve official and a looming political deadline in Washington outweighed earlier upbeat economic data from Germany and China, Reuters reported.
Referring to the timeline that Fed Chairman Ben Bernanke articulated in June, New York Fed President William Dudley said the framework for withdrawing stimulus is “still very much intact” as long as the economy keeps improving.
Investors were caught off guard last week when the Fed decided against reducing asset purchases from the current $85bn monthly pace after many had anticipated a change in policy would come in September.
The Standard and Poor’s 500 had rallied 1.2 per cent last Wednesday after the decision by the Fed. But the index is now on pace for a third straight decline, in which it has dropped 1.5 per cent.
Adding to concerns was the approaching October 1 deadline for Congress to avoid a government shutdown as lawmakers negotiate ahead of the end of the fiscal year on September 30.
“A combination of hearing lots of Fed presidents, and people from Capitol Hill talking, will always put investors in a bad mood,” said Ron Florance, deputy chief investment officer at Wells Fargo Private Bank in Scottsdale, Arizona.
“None of them are providing clarity. They are just providing more uncertainty and angst.”
A flood of new orders gave a boost to European and Chinese firms in September, according to surveys that added to evidence that the global economy is healing, but US factory activity lost some momentum.
Other Fed officials were on the speakers’ circuit Monday, and traders will be paying close attention after St. Louis Fed chief James Bullard said Friday the Fed could still decide to start trimming its stimulus in October if data warrant it.
The Dow Jones industrial average fell 50.35 points or 0.33 per cent, to 15,400.74, the S&P 500 lost 9.36 points or 0.55 per cent, to 1,700.55 and the Nasdaq Composite dropped 22.806 points or 0.6 per cent, to 3,751.922.US stocks decline on Fed, Washington uncertainty by ngcareers