Page 23 - ARUBA TODAY 29August2015
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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
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