Fed rates, Ukraine keep Wall Street traders wary

Still-cheap funds and signs of US economic strength after a lull kept Wall Street buyers cautiously in action this week, despite the Ukraine crisis and the Fed’s interest rates misfire. Trade became more bumpy amid rising tensions between the West and Russia over its annexation of Ukraine’s Crimea region. And Federal Reserve Chair Janet Yellen added to the volatility by telling journalists that interest rates could begin rising “around six months” following the end of the quantitative easing stimulus program. That sent stocks sinking as analysts calculated it meant a possibly early 2015 for a fed funds rate hike, instead of the second half of the year as previously suspected. It would be the first move in interest rates off the rock-bottom level since the end of 2008. But even after that, the Fed’s confidence in the economy – shown by its willingness to keep reducing the stimulus – and some better-than-expected economic indicators bolstered shares overall. Overall, the S&P 500 was up 1.38 percent for the period, ending at 1,866.52. On Friday it hit an intraday record of 1,883.97 before pulling back. The Dow Jones Industrial Average put on 1.48 percent to 16,302.77. And the Nasdaq Composite, hit by a 1 percent loss on Friday, still managed to end the week with a 0.82 percent gain, to 4,276.79. Yellen’s gaffe, made in response to a journalist’s question following her first monetary policy meeting as chair, seemed to put the rate hike earlier than what the Federal Open Market Committee was itself forecasting, according to AFP.