Markets Right Now: Stocks end mostly lower on Wall Street

Federal Reserve Chair Janet Yellen said Friday that the case for raising interest rates has strengthened in light of a solid job market and an improved outlook for the USA economy and inflation.

Stock markets and the loonie had barely moved Thursday in anticipation of Yellen’s speech Friday at the central bank’s annual summer symposium in Jackson Hole, Wyo. She pointed to steady gains in employment and strength in consumer spending.

A rate hike is possible at the Fed’s next policy meetings in September, November and December. Instead, she stressed, as she frequently has, that the Fed’s rate decisions will depend on whether the freshest economic data continues to confirm its outlook.

“Increased chatter about a Fed rate hike, and others still talking about easing, should spur some dollar buying”, Philip Borkin, senior economist in Auckland at ANZ Bank New Zealand Ltd. said in an e-mailed note to clients.

Shares of Herbalife (HLF.N) fell 4.7 percent to $59.04 after a report said Carl Icahn, the nutritional supplement maker’s top shareholder, was looking to sell his stake. Hong Kong’s Hang Seng index rose 0.4 percent.

Markets remained skeptical of the Fed’s rate hike projections largely because of the perceived wide gap between what it has signaled and ultimately delivered.

The rate had been kept at a record low near zero since the depths of the 2008 financial crisis.

“It’s clear from the Fed’s actions this year that it is aware of global risks, the impact of its own actions on those risks and any potential blow back to the USA economy and of the impact of a rising U.S. dollar in doing some of its work for it”.

At the time, the Fed foresaw four additional rate increases in 2016.

But policy makers quickly veered off this course early this year, fearing that the United States economy was growing more weekly than they had foreseen and global risks, especially from China and Europe, had risen.

Asked on CNBC whether people should get ready for a rate hike in September and another before the end of the year, Fischer said: “I think what the Chair said today was consistent with answering yes to both of your questions, but these are not things we know until we see the data”.

“Over last two or three trading sessions as well, the likely direction US Fed will take on rate hikes has been an important factor for local markets”, said Pankaj Sharma, head of equities at Equirus Securities.

Trade was fairly quiet as Yellen also suggested that the pace of future increases in the benchmark federal funds rate could be very slow.

“She’s certainly tried to make a case, but the market doesn’t believe that the Fed is going to actually raise rates”, said Brent Schutte, chief investment strategist at Northwestern Mutual Wealth Management.

Economists have also said the USA elections also add a measure of uncertainty to global economic outlook.