Stock Indexes Decline Slightly as Interest Hike Becomes More Likely

The trading day finished poorly on Tuesday as the major stock indexes have all registered mild downfalls.

The Dow Jones Industrial Average fell 86 points (0.5%) to 17,513, as Standard & Poor’s 500 (0.4%) and the NASDAQ Composite Index (0.4%) also registered downfalls by 4 p.m. EDT.

The indexes registered most of the slip just after Dennis Lockhart, president of the Federal Reserve Bank of Atlanta, spoke favorably of the possibility of federal interest rates being raised for the first time since before the economic recession. This is highly anticipated and was foreshadowed by the Federal Reserve many times since the beginning of the year, against a flurry of protests from investors who claim that this might hinder the country’s economic recovery.

There has been no set date for the hike in the federal interest rate, with most analysts predicting it to happen either in September or late in the year. The government’s employment report for July, which is set to be released on Friday, could be a vital factor in the announcement; with this year generally seeing jobs being added at pre-recession rates and the active workforce being at a nearly four decades high level.

The Dow plummet was also influenced by tech giant Apple, whose stock prices fell by 3.2 per cent amidst concerns that a Chinese economic slowdown would tamper with the company’s largest growth market. Apple’s shares finished at $114.64 in regular trading, almost $20 less than its April 28 record of $134.54, wiping out more than $113 billion in value. However, it still remains the S&P’s 500 most valuable company by market capitalization, being estimated at $657.6 billion.

However, China’s situation was slightly better on Tuesday as the Shanghai Composite Index closed 3.7 per cent higher. This is attributed to the harsher legislation against short selling introduced by the country’s government on Monday, preventing investor from trading around borrowed shares as usual.

Greece on the other hand is nowhere close to getting out of its economic woes, as the main stock index in Athens was down 4.5 per cent during early hours trade. Adding to the woes, the traditional benchmark Athex Composite opened on Tuesday for the first time in over month – and slumped by 16 per cent until the end of the day, which represents the biggest percentage dip it suffered in the last 24 years.

Image Source: The Guardian