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Benchmarks ended Thursday’s trading session in the red following St. Louis Fed president James Bullard’s comments on a rate-hike. Bullard expects the key interest rate hike to take place sooner than anticipated. The blue-chip index had dropped as much as 119 points, before trimming losses in the post noon session. Economic data on personal consumption expenditure was weaker-than-expected. However, personal income and claims for unemployment benefits were in line with expectations.

For a look at the issues currently facing the markets, make sure to read today’s Ahead of Wall Street article
 
The Dow Jones Industrial Average (DJI) declined 0.1% to close Thursday’s trading session at 16,846.13. The Standard & Poor 500 (S&P 500) too dropped 0.1% to finish at 1,957.22. The tech-laden Nasdaq Composite Index dropped a meager 0.02% to 4,379.05. The fear-gauge CBOE Volatility Index (VIX) went up almost 0.4% to settle at 11.63. Total volume for the day was roughly 5.1 billion shares, lower than this month’s average of 5.6 billion. Advancers outpaced declining stocks on the NYSE. For 51% stocks that advanced, 46% declined.
 
Benchmarks dropped on Thursday following comments from the president of the Federal Reserve Bank of St. Louis, James Bullard. He believes the central bank may hike interest rates by early 2015. He mentioned that a rise in interest rates may happen sooner than expected as unemployment rate falls and inflation increases at a faster pace. The Federal Reserve official believes U.S jobless rate will fall below 6% and inflation is likely to hit its 2% target later this year.
 
In an interview with Fox Business Network, Bullard said: “You are basically going to be near normal on both dimensions basically later this year”. He added: “That's shocking, and I don't think markets, and I'm not sure policymakers, have really digested that that's where we are”. “The Fed is closer to its goal than many people appreciate,” Bullard said. Bullard is currently a non-voting member of the Federal Open Markets Committee (FOMC).
 
Earlier this month, the Federal Reserve kept its monetary policy “highly accommodative” and suggested there would be no immediate rate hikes. The FOMC had decided during its two-day policy meeting that it was committed to keeping interest rates low. Reportedly, the Fed expects interest rates at the end of 2015 to approach 1.25%. The longer term rate forecast is now down to 3.75% from about 4%.
 
Federal Reserve Chairwoman Janet Yellen had also stated that the central bank will monitor a “wide range of indicators” on the labor market for deciding to hike rates. She added there “is no mechanical formula” to help Fed decide on raising the rates.
 
Economic data was largely discouraging on Thursday. According to the Bureau of Economic Analysis, personal consumption expenditure increased 0.2% in May. However, the consensus estimate had projected an increase by 0.4%. Rise in sale of new autos was cited to be the reason behind the increase in consumer spending last month.
 
Personal income also increased 0.4% in May. This was in line with the consensus expectation and was more than the rate of growth in April. Personal income rose by 0.3% in April. Disposable personal income (DPI) too increased 0.4% in May, in line with the increase in April.
 
Separately, the U.S Department of Labor reported that seasonally adjusted initial claims decreased 2,000 to 312,000 during the week ending June 21. The number of applications for unemployment benefits during the week remained near a post-recession low. The previous week's level was revised up by 2,000 to 314,000.
 
Meanwhile, the financial sector took a beating after New York State's attorney general Eric T. Schneiderman filed civil fraud charges against Barclays PLC (NYSE:BCS). He accused Barclays of giving an unfair advantage in the United States to high-frequency trading clients on its private trading platform. This is better known as the dark pool. Shares of the British bank plunged 7.4%.
 
Key stocks from the financial sector such as Wells Fargo & Company (NYSE:WFC), JPMorgan Chase & Co. (NYSE:JPM), Bank of America Corporation (NYSE:BAC) and Citigroup Inc. (NYSE:C) dropped 0.4%, 0.2%, 0.4% and 1.2%, respectively. Overall, the Financial Select Sector SPDR (XLF) declined almost 0.4%.
 
Home goods retailer Bed Bath & Beyond Inc. (NASDAQ:BBBY) declined the most among the S&P 500 components. Shares of the retailer plummeted 7.2% a day after the company reported dismal first-quarter earnings report and a second-quarter earnings outlook that was below analysts’ expectations. Bed Bath & Beyond posted earnings per share of 93 cents for the fiscal first quarter, less than the Zacks Consensus Estimate of 95 cents per share. Further, the retailer forecasted second quarter earnings per share at $1.08-$1.16, less than analysts’ expectations of $1.20 a share.
 
Six out of 10 sectors of the S&P 500 ended in the red. The Consumer Staples Select Sector SPDR (NYSE:XLP) declined 0.4%, the highest among the S&P 500 sectors. Major stocks from the sector such as The Procter & Gamble Company (NYSE:PG), Philip Morris International, Inc. (NYSE:PM), Wal-Mart Stores Inc. (NYSE:WMT) and Altria Group Inc. (NYSE:MO) decreased 0.9%, 2.7%, 0.9%, and 0.3%, respectively.

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