Stocks Sag As Fed Officials Signal Rate Hike -- US Commentary

(RTTNews) - Stocks fell Friday after a number of Federal Reserve officials said it is almost time to raise interest rates.

Federal Reserve chair Janet Yellen was among the speakers at Jackson Hole advocating gradual tightening.

The Federal Open Market Committee "continues to anticipate that gradual increases in the federal funds rate will be appropriate over time to achieve and sustain employment and inflation near our statutory objectives," Yellen said in Jackson Hole.

The Dow slid 53 points, or 0.3%, to finish at 18,395, the S&P 500 dropped 3 points, or 0.2%, to close at 2,169. The Nasdaq bucked the trend to rise 6 points to 5,218.

"Overall, along with the more upbeat tone of the recent data, we think the odds of a September rate hike have probably increased," said Andrew Hunter, U.S. Economist at Capital Economics. "They will increase further if we are right in forecasting that non-farm payrolls increased by a solid 180,000 in August."

He added, "Nonetheless, with real GDP expanding by just 1.2% over the past 12 months and inflation continuing to run below target, we still think most Fed officials will want to wait until December before next raising rates."

The Commerce Department released a report before the start of trading showing a slight downward revision to the pace of U.S. economic growth in the second quarter.

The report said gross domestic product increased by 1.1 percent in the second quarter, reflecting a downward revision compared to the originally reported 1.2 percent growth. The revision matched economist estimates.

The downwardly revised GDP growth in the second quarter still reflects an acceleration from the 0.8 percent increase seen in the first quarter.

A separate report from the University of Michigan unexpectedly showed a slight deterioration in consumer sentiment in the month of August.