U.S. Stocks Fall as Fed's Lockhart Says Economy Ready for Rate Increase

By Leslie Josephs And Saumya Vaishampayan 

        U.S. stock indexes slipped Tuesday after Federal Reserve Bank of Atlanta President Dennis Lockhart said the economy is ripe for a rise in short-term interest rates.
        The Dow Jones Industrial Average was down 85.7 points, or 0.5%, to 17513. The S&P 500 fell 0.4% to 2089, while the Nasdaq Composite fell 21 points, or 0.4%, to 5094.
        "I think there is a high bar right now to not acting, speaking for myself," Mr. Lockhart said in an interview with The Wall Street Journal.
        Investors have been parsing economic data, from wage growth to unemployment figures, for clues on when the Federal Reserve could begin raising rates for the first time in nearly a decade. Many are focused on the government's employment report for July due Friday.
        "Until [the Fed raises rates], it's just going to be constant speculation, said Kenny Polcari, director at O'Neil Securities. Mr. Polcari added that even a quarter-percentage-point increase would not be enough to dissuade investors from favoring stocks.
        "Just because they're going up to 25 basis points doesn't mean they're going to 8%," Mr. Polcari said. "Twenty-five basis points is not going to destroy anyone. I think it's too minimal."
        Shares in Baxalta, Inc. soared 13% to $37.35 after Dublin-based Shire PLC said it offered to acquire the rare-disease treatment maker for roughly $30.6 billion.
        Shares in Allstate Corp. fell 11% to $62.05 after the insurer reported second-quarter earnings of 63 cents a share, below expectations of 97 cents a share.
        The Stoxx Europe 600 fell 0.2% to 398.75.
        The Shanghai Composite Index closed 3.7% higher after Chinese authorities late Monday moved to clamp down on short selling by implementing rules under which investors must wait at least one day to cover their positions and pay back loans used to buy shares. When shorting a stock, investors sell borrowed shares on the belief they can buy them back at a lower price later, pocketing the difference.
        Investors also kept a sharp eye on the main stock index in Athens on Tuesday, which fell 4.5% in early trade and was down 1.2% recently. On Monday, the benchmark Athex Composite opened for the first time in just more than five weeks and closed 16% lower, representing its biggest fall in percentage terms since at least January 1991, according to Thomson Reuters data.
        In other markets, the euro was weaker against the U.S. dollar $1.0904. Gold futures fell 0.4% to $1085.50 an ounce. Treasury prices slipped, pushing the 10-year yield up to 2.204% from 2.150% on Monday. Yields rise as bond prices fall.
        Write to Leslie Josephs at leslie.josephs@wsj.com and Saumya Vaishampayan at saumya.vaishampayan@wsj.com
        (END) Dow Jones Newswires

        August 04, 2015 14:43 ET (18:43 GMT)

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