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Wall Street headed south in late trading Monday (June 12) as inflation fears kept investors on edge following hefty losses last week, the worst so far in 2006.
The Associated Press reported that investors have been reluctant to buy stocks ever since the Federal Reserve said in early May that record oil prices could require higher interest rates to keep prices from climbing elsewhere. Downbeat inflation comments from Federal Reserve Bank of Cleveland President Sandra Pianalto on Monday were another reminder for an already uneasy market.
But recent signs of slowing economic growth now has Wall Street worried that more rate hikes could send the economy sliding. Trading was expected to be skittish this week ahead of wholesale and consumer price data, which might bring clues about whether the Fed will boost rates again at its June 28-29 meeting.
“There are certainly some positives in the economy to point to, but until we get some more clarity on the battle between inflation and economic growth, the markets are likely to remain volatile,” said Michael Sheldon, chief market strategist at Spencer Clarke LLC.