Stocks slide as Yellen hints of higher rates earlier than expected

Stocks eased off session lows but still closed sharply lower after Janet Yellen raised jitters about the prospect of interest rates rising sooner than some market participants had been expecting.

Traders say losses were driven mostly by fast-trading short-term investors, who seized on Yellen's remark that the Fed could hike rates "around six months" after it fully winds down its tapering program; trading volume was relatively low after the announcement and focused in derivatives and exchange-traded products rather than individual stocks.

The bond market said it's time to prepare for higher short-term rates as Treasurys weakened, pushing the yield on the benchmark 10-year note as high as 2.79%.

In equities, the spike in yields weighed on the rate-sensitive utilities sector, while energy, industrials and materials also suffered a bout of selling.

The dollar shot up against the yen and strengthened vs. the euro; gold's losses deepened after the statement, with futures recently down 1.9% at $1,330.

Comments (1)
  • Moon Kil Woong
    , contributor
    Comments (13541) | Send Message
    Why does this remind me of what happened after Greenspan left. I wonder if the economy will meltdown like it did half way into the rate hikes with Bernanke. Perhaps it will meltdown before even that. The lower rates are before the next downturn the more danger and damage it can cause.
    20 Mar 2014, 12:18 AM Reply Like
DJIA (DIA) S&P 500 (SPY)
ETF Screener: Search and filter by asset class, strategy, theme, performance, yield, and much more
ETF Performance: View ETF performance across key asset classes and investing themes
ETF Investing Guide: Learn how to build and manage a well-diversified, low cost ETF portfolio
ETF Selector: An explanation of how to select and use ETFs