Stocks slide as Yellen hints of higher rates earlier than expected

|By:, SA News Editor

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.