(Updates with close)
* Fed's Bullard sees rate hike in 2015 Q1 as appropriate
* Financial stocks slide on U.S. lawsuit vs Barclays
* Sterling up, BOE fails to dampen rate hike speculation
By Barani Krishnan
NEW YORK, June 26 U.S. stocks ended slight lower
on Thursday after a Federal Reserve official said interest rates
should rise by early 2015, while the pound gained on talk that
UK rates also will go up, even as the Bank of England took only
mild steps to tighten lending.
The dollar erased gains to trade flat against a basket of
major currencies as foreign exchange traders discounted the
remarks by the president of the St. Louis Fed, James Bullard.
Bullard, in televised comments, said that raising rates by the
end of the first quarter in 2015 would be appropriate, based on
his forecast that U.S. growth will register 3 percent for the
next four quarters.
On Wall Street, six of the 10 S&P 500 sectors finished
"The market is a little bit extended, and we're at the point
where there's a little bit of rebalancing going on," said Fred
Dickson, chief market strategist at D.A. Davidson & Co, in Lake
Bullard, a non-voting member of the Fed's policy-setting
committee, said in an interview with Fox Business Network that
the U.S. jobless rate will fall below 6 percent later this year.
Inflation looked likely to rise back to 2 percent, putting the
economy closer to normal than most realize, he said.
"I think Bullard caught most people off guard as the Fed
meeting was just last week and there was no explicit reading
anyone took from there of a Q1 rate hike," said Adam Sarhan,
chief executive at New York's Sarhan Capital.
"It's very possible that he's on his own or he might have
one other Fed official or a minority within the Fed who thinks
we should raise rates sooner rather than later," Sarhan said.
The Dow Jones industrial average fell 21.38 points or
0.13 percent, to end at 16,846.13. The S&P 500 slipped
2.31 points, or 0.12 percent, to 1,957.22. The Nasdaq Composite
dipped 0.71 point, or 0.02 percent, to 4,379.05.
Financial stocks were among the sharpest decliners after a
securities fraud lawsuit filed by the New York state attorney
general against British bank Barclays. The lawsuit
accuses Barclays of giving an unfair edge in the United States
to high-frequency trading clients even as it claimed to be
protecting other customers from such traders.
U.S.-listed Barclays shares fell 7.4 percent to
$14.55. The bank's London-listed shares ended down 6.5 percent.
U.S. government bond prices rose, with yields on benchmark
10-year Treasuries hitting a three-week low at 2.5322 percent.
Sterling rose 0.25 percent to $1.7025 as steps
announced by the Bank of England to cool the UK housing market
failed to dampen expectations the central bank was set to raise
The U.S. dollar index, which measures the dollar
against a basket of six major currencies, was last flat at
80.222. The dollar index erased earlier gains after U.S. data
suggested growth was perking up but was not robust enough to
give a decisive lift to the dollar.
The FTSEurofirst 300 index of top European stocks
finished down 0.1 percent at 1,370.38 points, dragged lower by
the Bullard comments and the lawsuit against Barclays.
In commodities, the spot price of gold fell 0.2
percent to $1,316.99 an ounce.
In oil, Brent crude finished down 0.7 percent at
$113.21 a barrel while U.S. crude ended 0.8 percent lower
at $105.70 after a bearish turn in the latest U.S. economic data
and easing concerns of a supply disruption from the conflict in
(Additional reporting by Patrick Graham and Jemima Kelly in
London; Editing by Meredith Mazzilli and Leslie Adler)