By Leslie Josephs and Saumya Vaishampayan
U.S. stock indexes slipped Tuesday after Federal Reserve Bank of
Atlanta President Dennis Lockhart said the economy is ripe for a
rise in short-term interest rates.
The Dow Jones Industrial Average fell 47.5 points, or 0.3%, to
17550.69. The S&P 500 lost 4.72 points or 0.2% to 2093.32,
while the Nasdaq Composite fell 9.4 points, or 0.2%, to
5105.55.
"I think there is a high bar right now to not acting, speaking
for myself," Mr. Lockhart said in an interview with The Wall Street
Journal
Tuesday's slide extended the Dow industrials' declines to four
trading sessions and the S&P 500's losing streak to three
sessions.
Investors have been parsing economic data, from wage growth to
unemployment figures, for clues on when the Federal Reserve could
begin raising rates for the first time in nearly a decade. Many are
focused on the government's employment report for July due
Friday.
"Until [the Fed raises rates], it's just going to be constant
speculation," said Kenny Polcari, director at O'Neil Securities.
Mr. Polcari added that even a quarter-percentage-point increase
wouldn't be enough to dissuade investors from favoring stocks.
"Just because they're going up to 25 basis points doesn't mean
they're going to 8%," Mr. Polcari said. "Twenty-five basis points
is not going to destroy anyone. I think it's too minimal."
Shares of Baxalta Inc. ended 11.9% higher at $37.10 after
Dublin-based Shire PLC said it offered to acquire the rare-disease
treatment maker for about $30.6 billion. Deerfield, Ill.-based
Baxalta rejected the proposal, saying it undervalued the
company.
Shares in Allstate Corp. fell 10.2% to $62.34 after the insurer
reported second-quarter earnings of 63 cents a share, below
expectations of 97 cents a share.
The Stoxx Europe 600 fell 0.2% to 398.75.
The Shanghai Composite Index closed 3.7% higher after Chinese
authorities late Monday moved to clamp down on short selling by
implementing rules under which investors must wait at least one day
to cover their positions and pay back loans used to buy shares.
When shorting a stock, investors sell borrowed shares on the belief
they can buy them back at a lower price later, pocketing the
difference.
Investors also kept a sharp eye on the main stock index in
Athens on Tuesday, which fell 4.5% in early trade and fell 1.2%. On
Monday, the benchmark Athex Composite opened for the first time in
just over five weeks and closed 16% lower, representing its biggest
fall in percentage terms since at least January 1991, according to
Thomson Reuters data.
In other markets, the euro was weaker against the dollar, at
$1.0886 in late afternoon trading. Gold futures fell 0.2% to
$1086.80 an ounce. Treasury prices slipped, pushing the 10-year
yield up to 2.211% from 2.150% on Monday. Yields rise as bond
prices fall.
Write to Leslie Josephs at leslie.josephs@wsj.com and Saumya
Vaishampayan at saumya.vaishampayan@wsj.com