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Markets Falter On Rate Hike Worries

Markets Falter On Rate Hike Worries

U.S. stock markets plummeted more than 2 percent on Friday following equities around the world as investors pondered the likeliness of an interest rate hike after Federal Reserve officials talked to the public.

Earlier, the Fed’s Eric S. Rosengren and Daniel K. Tarullo issued comments that suggested a rate hike could come before the end of the year.

With each comment, indexes sunk further. Below is a look at the performance of the S&P 500 Index on Friday.

Source: Google Finance

Around 11:16 a.m., Tarullo signaled a hike, but added he wants to see inflation moving toward 2 percent first. "We're not running a hot economy," he said.

Related Link: 3 Charts That Show The Fed's Words Actually Matter

"Over the last year ... the unemployment rate has remained just about stable, while we've had about a million jobs above the replacement needs," Tarullo continued. "Remember our mandate is maximum employment not some constructed view of full employment."

Historically dovish Rosengren’s comments were seen as hawkish by most and drove markets down almost immediately starting around 10:24 a.m. "If we want to ensure that we remain at full employment, gradual tightening is likely to be appropriate," he added. “A reasonable case can be made for continuing to pursue a gradual normalization of monetary policy.”

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Disclosure: Javier Hasse holds no interest in any of the securities or entities mentioned above.

Posted-In: Fed Federal Reserve S&P 500News Federal Reserve Markets Movers Best of Benzinga


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