U.S. shares slip on Fed rate hike worries; dollar climbs

Tue Aug 30, 2016 4:25pm EDT
 
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By Sam Forgione

NEW YORK (Reuters) - U.S. stocks slipped on Tuesday after stronger-than-expected U.S. consumer confidence data stoked concerns about a potential Federal Reserve interest rate hike this year and technology stocks dragged, while European shares and the dollar hit multi-week highs.

The Conference Board said its consumer confidence index rose to 101.1 this month, an 11-month high. The data, which beat economists' expectations for a dip to 97.0 according to a Reuters poll, stoked expectations that the Fed could raise rates this year after top Fed officials have said recently that such a move was possible.

Fed Vice Chairman Stanley Fischer, in an interview with Bloomberg TV on Tuesday, said the U.S. job market is close to full strength and the pace of interest rate hikes will depend on how well the economy is doing.

Mounting expectations for a Fed hike this year boosted European financial stocks and helped the pan-European STOXX 600 .STOXX hit its highest level since mid-August. Banks benefit from higher interest rates, which can boost margins.

Apple (AAPL.O: Quote) dragged down U.S. technology stocks after EU antitrust regulators ordered the iPhone maker to pay about $14.5 billion in back taxes to the Irish government. Apple shares were last down just under 1 percent.

The dollar index .DXY, which measures the greenback against a basket of six major rivals, strengthened to a nearly three-week high of 96.064 as investors looked ahead to Friday's jobs data. The index was last up 0.49 percent at 96.048.

"Any signs of strength make investors worry that the Fed will accelerate their plans to raise interest rates," said Alan Gayle, head of asset allocation at Atlanta-based RidgeWorth Investments.

MSCI's all-country world equity index .MIWD00000PUS was last down 0.57 points, or 0.14 percent, at 417.47.   Continued...

 
Traders work on the floor of the New York Stock Exchange (NYSE) shortly after the opening bell in New York, U.S., August 30, 2016. REUTERS/Lucas Jackson