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US stocks come off record highs, spooked by Fed rate comments

Last updated: 14:29 16 Aug 2016 EDT, First published: 09:29 16 Aug 2016 EDT

FRBNY_President_Dudley

US stocks were lower at midsession on Tuesday, unable to build on the previous day’s record highs, as a senior Federal Reserve policymaker’s comments put a rate hike in 2016 back on the table.

Even firmer oil prices failed to cheer on investors. The US oil benchmark West Texas Intermediate was up 2% at $46.63.

The odds traders attribute to the Federal Reserve hiking interest rates this year climbed to 50% on Tuesday, the highest level since early June, as investors eyed hawkish remarks from William Dudley, the head of the New York Fed, said a September rate rise is on the table and warned that market participants have grown complacent in their expectations that the central bank will not increase rates in the near-term.

The market bellwether S&P 500 index was down 0.5% at 2,180 and ever further off the intraday high of 2,193 posted on Monday when higher oil prices were enough to raise market. The blue-chip ticker has been in negative territory all morning in New York.

A number of S&P500 oil companies were higher, with the index gainers led by Chesapeake Energy Corp (NYSE:CHK) up 6.6% at $5.88.

But decliners included Verisign Inc (NASDAQ:VRSN) down 6.4% to $76.55 and after a poor earnings report, retail group TJX Companies Inc (NYSE:TJX), owners of TJ Maxx, were down 5.3% to $78.40.

The S&P Midcap 400 was down 0.8% at 1,556 and led by snack food company Hain Celestial Group (NASDAQ:HAIN), down 26.7% to $39.13, after it announced it will delay its fiscal 2016 earnings report due to accounting problems.

Hain was originally supposed to report earnings for its fiscal fourth quarter this week, but is reassessing the ways in which it had accounted for some of its revenue.

Meanwhile, lawyers Glancy Prongay & Murray LLP (GPM) said on Tuesday it is conducting an investigation on behalf of Hain’s investors concerning the company and its officers' possible violations of federal securities laws. GPM is preparing a lawsuit on behalf of injured investors.

The top mid-cap gainer was retailer Dick’s Sporting Goods Inc (NYSE:DKS) up 7.5% to $58.99 after pleasing earnings.

The S&P Small-cap 600 was down 0.5% at 747 and led by Fabrinet (NYSE:FN), down 5.4% to $40.02.


Pre-Open

Having hit fresh highs yesterday, the major benchmarks are set to take a step back today.

Spread betting quotes point to the Dow Jones average opening at around 18,584, down from last night’s record closing level of 18,636 while the broader-based S&P 500 is tipped to open its account at around 2,184, down six points or so from last night’s all-time high closing value.

The market’s biggest stock by market value, Apple Inc (NASDAQ:AAPL), was nudging higher in pre-market trade as legendary investor Warren Buffett upped his stake through his investment vehicle, Berkshire Hathaway Inc (NYSE:BRK.A).

Sporting equipment seller Dick’s Sporting Goods Inc (NYSE:DKS) looks set to hit a new personal best when trading commences on the back of better-than-expected results.

The shares were 8.5% higher at US$59.55 in screen-based trading as like-for-like sales in July were 2.8% higher year-on-year, confounding analysts who had expected a decline.

Elsewhere in the retail sector TJX Companies Inc (NYSE:TJX), the parent company of TJ Maxx, fared less well, sliding 3.7% to US$79.75 in pre-market trading as its earnings guidance for the third quarter was below the market consensus.

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