September 13, 2016

Stocks Drop on Interest Rate Worries

Stocks Drop on Interest Rate Worries (WEEKLY UPDATE – SEPTEMBER 12, 2016) Stocks Drop on Interest Rate Worries, After trading flat for most of the week, stocks broadly sank Friday on fears of a future rate hike. For the week, the S&P 500 lost 2.39%, the Dow fell 2.20%, the NASDAQ dropped 2.36%, and the MSCI EAFE lost 0.16%.[1] Monetary policy was at the forefront of investors’ minds last week as they continue to calculate the odds of an interest rate increase ahead of the September Federal Reserve’s Open Market Committee (FOMC) meeting. The European Central Bank (ECB) declined to increase its stimulus program, voting to stand pat on interest rates and current bond-buying activity. The decision wasn’t a total surprise as the Eurozone economy has proved resilient after Britain voted to exit the EU. However, the ECB did confirm that it will consider further quantitative easing in 2017 if conditions worsen.[2]  No exit date for Britain has been announced, though the new prime minister has indicated it will not begin before next year.[3] On our side of the Atlantic, surprise comments by a voting member of the Fed increased speculation that a rate hike may come this month.[4]  When […]