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BUSINESSSaturday 29 August 2015
Calm on Wall Street: Fed vice chair in spotlight as
A turbulent week ends on a placid note markets seek rate hike clues
ALEX VEIGA the Federal Reserve may visiting New York on Fri- MARTIN CRUTSINGER
AP Business Writer hold off raising interest day. Because he recently AP Economics Writer
Well, that was exciting. rates this fall, and a new left his job, Chang has to WASHINGTON (AP) — What once seemed a sure bet
Days after China threw report that said the U.S. sell investments he bought — that the Federal Reserve would raise interest rates
the biggest scare into Wall economy is growing at a with stock options within in September — suddenly appears less certain follow-
Street in years, U.S. stocks more robust rate than pre- 90 days — something he ing a wild week of stock market turbulence.
have come surging back viously believed. can’t do now without tak- The market’s ride and how the Fed will react provide
and ended the week Fri- Still, the concerns that trig- ing a big loss. the backdrop for the annual high-profile economic
day on a placid note that gered the sell-off remain: But for other investors like conference in Jackson Hole, Wyoming. Fed Chair Ja-
suggested the worst may slumping oil prices, a slow- James Day, a data man- net Yellen decided to skip this year’s meeting, so Vice
be over for now. ing Chinese economy, agement specialist in Fern- Chairman Stanley Fischer is commanding top atten-
Even so, investors are buck- weak corporate earnings dale, Michigan, the stock tion, with investors eagerly parsing his every word.
ling their seat belts for more forecasts and uncertainty market swoon was a signal Fischer’s message: Incoming economic data and
turbulence ahead. over interest rates. to buy low and boost his market developments over the next two weeks will
The Dow Jones industrial That means there’s likely contributions to his 401(k). play crucial roles in determining whether the Fed rais-
average fell a scant 11.76 to be more market volatil- “I’m not looking to retire es interest rates at its September meeting.
points Friday, or 0.1 per- ity ahead, something that tomorrow, so as far as I’m In an interview Friday with CNBC, Fischer acknowl-
edged that before the recent market volatility, “there
Skip Schweiss, third left front row, Managing Director, Advisor Advocacy and Industry Affairs of was a pretty strong case” for a rate hike at the Sept.
16-17 meeting, though it wasn’t conclusive. Now, the
TD Ameritrade, joins the applause during opening bell ceremonies of the New York Stock Ex- jury is out because the Fed needs to assess the eco-
nomic impact of events in China and on Wall Street.
change, Friday, Aug. 28, 2015. (AP Photo/Richard Drew) But Fischer said Fed officials realize that they need to
act before data requires them to hike rates to allevi-
cent, to 16,643.01, capping history backs up. Septem- concerned, I have time,” ate inflation. “When the case is overwhelming, if you
a week that saw stomach- ber has been the worst said Day, 43. “If I don’t wait that long, you will be waiting too long,” Fischer
churning losses and gains month for stocks. “For the think I’m staring down the said. “There is always uncertainty, and we will just
of around 600 points per last few years, let’s face barrel of some long-term have to recognize that.”
day. The Standard & Poor’s it, there’s been very little recession or unemploy- Fischer tried to reassure markets, as Yellen has, that
500 index rose 1.21 points, volatility,” said JJ Kinahan, ment, I look at these dips when the Fed begins to raise rates, it plans to do
or 0.1 percent, to 1,988.87. TD Ameritrade’s chief strat- as an opportunity.” so very gradually. The Fed’s key rate has been at a
The Nasdaq composite egist. “We’ve had a very Investors can expect the range of zero to a quarter-point since late December
added 15.62 points, or 0.3 impressive rally. Not that volatility to continue at 2008. Fischer said the first move would nudge that up
percent, to 4,828.32. we can’t go higher, but it’s least until the market gets by a quarter-point to a range of 0.25 percent to 0.5
U.S. stocks went into their not going to be an easy a better idea from the Fed percent and then pausing to monitor the impact. He
swoon last week, mostly path to get there.” The S&P on the timing of an interest said with that small increase, rates will still be histori-
over signs of a slowdown 500 is still nearly three times rate increase, something cally low, continuing to provide support to consumer
in China, the world’s sec- higher than its post-2008 fi- many investors fear could and business borrowers.
ond-biggest economy. nancial crisis low in March put a damper on the U.S. “We will be adjusting the knob slightly,” he said.
Before the six-day losing 2009. The Dow is up roughly economy. Fischer said his “confidence is pretty high” that low
streak had ended, the 2 1/2 times higher. Federal Reserve Vice levels of inflation will head toward the Fed’s target
Dow had plummeted 1,900 Despite the bounce- Chairman Stanley Fischer of 2 percent as temporary effects from a big drop
points and the S&P 500 was back this week, stocks are said Friday that before the in energy prices fade. A government report Friday
undergoing its first “correc- on course for their worst recent turbulence, there showed that the Fed’s preferred measure of inflation
tion,” a decline of 10 per- monthly performance in was a “pretty strong case” is up just 1.2 percent over the past 12 months. It has
cent or more, in nearly four more than three years. The for raising rates in Septem- been below 2 percent for the past three years.
years. S&P 500 is down 5.5 per- ber. But he said the Fed is Fischer will deliver more comments on inflation in a
But stocks soared at mid- cent in August, and the watching how events un- formal speech to the conference on Saturday.
week, cutting the Dow’s Dow is down 5.9 percent. fold. Traders and strate- Other Fed officials who have spoken since the mar-
losses nearly in half, in a “That kind of volatility is gists have often described ket turmoil hit with force have hinted at a delay. But
rally analysts attributed to really pretty scary,” said the U.S. stock market as they haven’t ruled out a hike in mid-September.
bargain-hunting, signs that Hans Chang, 33, who was overbought.q William Dudley, president of the New York Federal Re-
serve, helped ignite a Wall Street rally this week when
he told reporters that the case for raising rates in Sep-
tember was “less compelling to me” that it had been
a few weeks ago, before sudden fears about China’s
economy upset global markets.
But Dudley added that the notion of a rate hike
“could become more compelling by the time of the
meeting as we get additional information” about the
economy.
Esther George, president of the Kansas City Fed-
eral Reserve, which sponsors the Jackson Hole con-
ference, said she was taking a “wait and see” ap-
proach. “We’ve seen data that suggests the econ-
omy is strong enough to act. So we’ll see what hap-
pens by the September meeting,” George, who
doesn’t have a vote on the Fed’s policy committee
this year under the committee’s rotating system, told
Fox Business Network.q