These Downbeat Fed Speeches Subdued Stocks
Stocks slipped further into the red on Monday following a trio of downbeat speeches from Federal Reserve officials.
Monday turned out to be a bad day for stocks, as a disappointing Flash U.S. Manufacturing PMI report from Markit Economics was followed by downbeat speeches from three Federal Reserve Officials. Although the Markit Flash U.S. Manufacturing PMI for September continued to show expansion, it declined to 52.8 from August’s final reading of 53.1. A result above 50 indicates expansion. Economists were expecting an increase to 54.0.
The financial sector had a tough day after three Federal Reserve officials gave speeches that drove home the point that the taper did not begin this month because the economy is still in bad shape. New York Federal Reserve President (and FOMC member) William Dudley spoke at the Fordham Wall Street Council and delivered a message based on the following theme:
“In my view, the economy is slowly healing. But, while significant progress has been made since the end of the recession, there remain a number of headwinds that have offset the improvement in the underlying fundamentals. As a result, we have yet to see any meaningful pickup in the economy’s forward momentum.”
Atlanta Federal Reserve President Dennis Lockhart (who is not an FOMC member) delivered a speech entitled “Is the U.S. Economy Losing Its Dynamism?” Here is his answer:
“The question I posed at the outset was whether the economic dynamism of the United States is declining. Is America losing its economic mojo? There is some evidence to the affirmative. I believe some of what we observe can be explained by the recent recession and frustratingly slow recovery.”