The US stock market held up remarkably well last week despite tensions surrounding the situation in Ukraine, but there is only so much strain investor sentiment can take before it starts to bend downward. Signs that all is not well with the Chinese economy exerted that extra force to put a kink in the upward trajectory of Wall Street today.
We now have potential trouble brewing in Crimea, where Russian forces continue to mass, alongside concerns over how the global recovery is faring; the US market has been turning a bit of a blind eye to economic softness, writing it off as weather-related, but these additional issues are really going to turn the screws on investor confidence.
Additionally, investors are having to factor in that simulus from the Fed that will be drying up; continuing reductions in the pace of the Fed’s monthly asset purchases was a clear message from both the Chicago Fed’s Charles Evans and the Philly Fed’s Charles Plosser in speeches today.
‘The last two meetings we reduced the purchase flow rate by $10 billion and we're going to continue to do that,’ said Mr Evans, while Mr Plosser said, ‘It’s important to give some certainty or at least clarity to the markets on what we’re doing. It’s OK to continue at $10 billion. The hurdle rate for change is pretty high in either direction.’
The Dow Jones closed down 0.21%.