The Federal Reserve is sending mixed messages to the stock market.
Fed Chair Janet Yellen seemed worried last week about the weakening global economic outlook, saying: “The situation abroad bears close watching.” It signaled a “dovish” or cautious approach to the timing on lifting the Fed’s benchmark interest rates from zero.
In the days since then she’s been contradicted several times by “hawkish” Fed presidents who want to raise interest rates sooner rather than later.
Stock market investors have struggled to understand the reasons behind the Fed’s decision not to raise rates on Thursday and also to predict exactly when rates will rise.
The Dow fell almost 300 points Friday, before rising a little on Monday and then again falling over 180 points Tuesday. With other bad news — Volkswagen’s emissions scandal, China fears — already in the mix, heightened Fed uncertainty adds pressure on markets.