Stocks closed lower Thursday after the president of the Federal Reserve Bank of St. Louis, said interest rates may rise early next year, and the Commerce Department reported consumer spending in May rose less than expected.
At the close on Wall Street, stocks had recovered from a morning slump but were still down. The Standard & Poor's 500 index was off 2.3 points, or 0.1 percent, at 1,957.2. The Dow Jones industrial average was down 21.4 points, or about 0.02 percent, to 16,846.1, and the Nasdaq composite was off 0.7 point, nearly 0.5 percent, at 4,379.1.
Companies seeing moves Thursday included Barclays, which closed down $1.16 at $14.55 after New York Attorney General Eric Schneiderman announced a lawsuit against the international bank, alleging Barclays defrauded clients through a series of false statements about how, and for whose benefit, Barclays operates its electronic trading.
Bed Bath & Beyond closed down more than 7 percent after the company posted earnings and sales that fell short of analysts' estimates. Shares fell $4.41 to $56.70 at the close.
But it was the pronouncement of Federal Reserve Bank of St. Louis President James Bullard that jolted the markets the most.
Speaking on Fox Business Network, Bullard predicted an interest-rate increase in the first quarter of next year as employment falls and inflation quickens. The U.S. jobless rate may fall below 6 percent and inflation rise near 2 percent by the end of this year, he said, and the markets may not be fully appreciating how close the Fed is to reaching it goals.
Bullard, who is not a voting member of the policy-setting Federal Open Market Committee this year, won't vote again until 2016.
Commerce Department figures Thursday showed the price measure tied to consumer spending watched by the Fed rose 1.8 percent from a year earlier. The Fed's inflation goal using this measure is 2 percent.
"There's a multitude of factors driving the market lower," said Cincinnati analyst Joe Bell in a phone interview. "You're seeing the Fed comments from Bullard come out, a market that's been on a low-volatility uptrend and uncertainty from a geopolitical standpoint over in Iraq. It's a perfect storm for different parties to take some money off the table." Bell is senior equity analyst at Cincinnati-based Schaeffer's Investment Research Inc.
Consumer spending, which accounts for about 70 percent of the economy, climbed 0.2 percent in May after being little changed in April, Commerce Department figures showed. The median forecast of 76 economists in a Bloomberg survey called for a 0.4 percent rise.