Investor fears of rising interest rates in a weakened economy may become a reality, as the Fed may have rising interest rates in the cards next. Many investors have started to liquidate their positions and go into defensive mode.. Read full story below…

Stock Market News – Spiking Interest Rates Take Down The Markets


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Anxiety over when the Federal Reserve will begin tapering its bond purchases and the subsequent spike in interest rates could keep markets choppy Tuesday.

“At some point, [the Fed] has to start to taper and that’s what the market is preparing itself for…whether it’s in September or October,” said Kenny Polcari, director at O’Neil Securities.

Benchmark 10-year note yields climbed as high as 2.90 percent Monday, the highest level since July 2011 and up from nearly 2.60 percent a week ago. Yields have gained more than a full percentage point since early May when Fed Chairman Ben Bernanke first hinted the central bank may scale back its asset purchases.

“This market’s been toggling and waiting for direction—it’s a scenario in which it’s not just economic data or geopolitical data, but still central bank driven,” said Quincy Krosby, market strategist at Prudential Financial. “We’ve always said the road toward interest rate normalization is going to be difficult and dotted by detours and obstacles.”

Art Cashin, director of floor operations at UBS Financial Services warned earlier Monday that “alarm bells” will go off for stocks once the yield hit the 2.90 percent level, adding that rising interest rates are already causing problems for equities in emerging markets.

“India is beginning to look particularly strange … Indonesia is getting pounded,” Cashin told CNBC. “You don’t usually have these at the top of your list, but they lurk in the background.”

U.S. stocks finished near session lows in light-volume trading Monday, with the Dow and S&P 500 logging their first four-day losing streaks this year. The Dow finished near the psychologically-important 15,000 level, extending losses after suffering its worst weekly decline of 2013.

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