Renewed investor worries sprang up Wednesday over the threat of future interest rate hikes, sparked by stronger-than-expected economic data and price reports.
Higher Treasury yields added pressure to tech stocks and added to investor worry that the Federal Reserve will use recent stronger-than-expected economic data to justify pushing benchmark lending rates higher to squelch inflation. The yield on the 2-year Treasury note added as much as 6 basis points Wednesday.
The Institute for Supply Management's U.S. services index climbed to a six-month high in August, while the price segment ticked up to 58.9%, a report Wednesday showed. The ISM index's price barometer hit a four-month high. "Given the data, the Fed will most likely deliver a hawkish pause at the next meeting," said by Jeffrey Roach, chief economist at LPL Financial. "The hard data is not yet convincing enough to establish strong views about the subsequent meetings. Investors should still find opportunities in the market but it could be a bumpy ride."
While 93% of interest rate traders foresee no change at September's Federal Open Market Committee meeting, expectations of an additional interest rate hike at the November meeting rose above 40%, according to the CME FedWatch tool.
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