Stocks Sink on Argentine Default and Rate Hike Worries
Stocks are under heavy pressure today with concerns in Argentina and worries about a sooner-than-expected Fed Interest rate hike weighing on investors.
Heading into the close the Dow is down 307 points, the Nasdaq is down 90 and the S&P 500 is down 38 points.
One concern on traders' minds was Argentina. The Latin-American country defaulted on its debt for the second time in 12 years. On June 30, 2014, Argentina failed to make a US$539 million interest payment on its Discount Bonds maturing in December 2033.
A bigger worry is the Fed may be forced to raise interest rates sooner than expected. In its policy statement yesterday, the FOMC indicated that "likelihood of inflation running persistently below 2 percent has diminished somewhat." Meanwhile, while the Fed said there remains "significant underutilization" of labor resources data today showed a bigger-than-expected bump in the employment cost index. Compensation costs for civilian workers increased 0.7 percent, for the 3-month period ending June 2014. Economists on average had only expected a 0.5 percent rise. The data showed compensation costs for civilian workers increased 2.0 percent for the 12-month period ending June 2014.
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