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Stocks down as investors evaluate Fed hint

Pedestrians walk past the New York Stock Exchange

Pedestrians walk past the New York Stock Exchange on Wall Street on Friday, May 13, 2016. Credit: Bloomberg News / Michael Nagle

U.S. stocks slipped Thursday as investors adjusted to the message from Federal Reserve policymakers that an interest rate hike is not out of the question if U.S. economic conditions keep improving.

ON WALL STREET: At the close, the Dow Jones industrial average was down 91.2 points, about 0.5 percent, at 17,435.5. The Standard & Poor’s 500 index had slipped 7.6 points, about 0.4 percent, to 2,040, and the Nasdaq composite was off 26.6 points, about 0.6 percent, at 4,712.5.

OIL PRICES: As markets closed the benchmark U.S. crude oil was down 19 cents at $48.59 a barrel in electronic trading on the New York Mercantile Exchange. In London, the international standard Brent crude had dropped 10 cents to $48.83 a barrel.

FED IN FOCUS: According to minutes of the Fed’s latest meeting, U.S. central bankers feel it would be time to raise rates at the next Fed meeting on June 14 and 15 if hiring and economic growth continue to strengthen and inflation keeps rising. The comments seemed to take some investors and analysts by surprise and raised the prospect that some of the loose monetary policy that has supported stock markets globally will be dialed back. Investors are hoping for more insight from Fed officials including vice chairman Stanley Fischer and William Dudley, president of the Fed’s New York regional bank, who are scheduled to give speeches later Thursday.

ANALYST’S OPINION: “Markets have looked for government stimulus as a reason for investing rather than good company economics or fundamentals. Obviously therefore if there’s less chance of stimulus people are left wondering what to do,” said analyst Andrew Sullivan, sales trader at Haitong Securities. “Yes, it will be a shock to people, and I’m sure there will be a knee-jerk reaction but the reality is we are nowhere near normal rates.”

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