Stocks fall, dollar up as investors weigh more rate hikes

New York, June 24 (BNA): Global stock indices fell and the US dollar rose on Friday as investors digested comments from Federal Reserve officials that indicated more interest rate hikes to come.

Major US stock indices posted losses this week, with the Nasdaq snapping eight consecutive weeks of gains. The Standard & Poor’s 500 Index ended a five-week streak of gains, Reuters reports.

San Francisco Fed President Mary Daly said in an interview with Reuters that two more rate hikes this year is a “very reasonable” expectation.

Testifying before US lawmakers this week, Federal Reserve Chairman Jerome Powell suggested that the central bank had not reached the end of its tightening cycle, while offering reassurance that the Fed would proceed with caution.

The Nasdaq led losses on Wall Street, and all major S&P 500 sectors closed lower on the day.

The Dow Jones Industrial Average fell 219.28 points, or 0.65%, to 33,727.43 points, the Standard & Poor’s 500 lost 33.56 points, or 0.77%, to 4,348.33 points, and the Nasdaq Composite fell 138.09 points, or 1.01%, to 13,492.52 points.

The pan-European STOXX 600 index lost 0.34% and the MSCI worldwide stock index fell 0.95%.

Treasury yields fell as the market allowed at least one Fed rate hike in the near term and raised the prospect of slower growth after weaker-than-expected growth in the Eurozone.

“The Treasury market is pricing in the reality that monetary policymakers are willing to risk a significant economic slowdown in their endeavors to re-establish price stability,” said Ian Lingen, head of US price strategy at BMO Capital Markets in New York.

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The benchmark 10-year note fell 6.2 basis points to 3.737%, from 3.799% late Thursday.

Eurozone government bond yields fell on news that German business activity, according to Purchasing Managers’ Indexes (PMI), slowed significantly in June, while French business activity contracted this month for the first time in five months.

In the foreign exchange market, dismal business data from around the world also soured risk sentiment. Data on Friday showed that business activity in the United States fell to a three-month low in June, as services growth slowed for the first time this year and the contraction deepened in the manufacturing sector.

The dollar index rose 0.469%, with the euro slipping 0.58% to $1.0892.

Oil prices closed lower on the day and posted a weekly decline as traders worried about demand.

Brent crude fell 29 cents to settle at $73.85 a barrel. US West Texas Intermediate crude fell 35 cents to $69.16.

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