Shares Fall Again After Official Hints That Fed Won't Keep Cutting
Wall Street pulled back for the third consecutive session Wednesday after a Federal Reserve official suggested that rising inflation could prevent the central bank from making further interest rate cuts.</br></br>The Dow Jones industrial average fell 65.03, or 0.53 percent, to 12,200.10, after rising more than 100 points in trading. The Standard & Poor's 500-stock index fell 10.19, or 0.76 percent, to 1326.45, and the Nasdaq composite index fell 30.82, or 1.33 percent, to 2278.75.</br></br>Although the economic slowdown is a big concern, "we must not lose sight of the other part of the Fed's dual mandate -- which is price stability," Federal Reserve Bank of Philadelphia President Charles Plosser said, according to Dow Jones Newswires. The economy has been weakening but costs remain high, leading some economists to believe that the United States is headed for a troubling predicament known as stagflation.</br></br>The speech, along with a disappointing sales report from Macy's, cut short a rebound from Tuesday's plunge that gave the Dow its biggest percentage drop since Feb. 27. The reminder about inflation also sapped some of Wall Street's relief over better-than-expected fourth-quarter productivity and labor cost data and profit results from Walt Disney Co.</br></br>Stocks have been volatile lately, given the uncertainty in the market about whether a we're in a recession, how long it might last, how deep it might be and how it could affect profits.