* Wall St sags in muted trade as investors try to gauge Fed
path
* Dollar hits six-week low against the yen
* Oil tumbles after comments from new Iranian president
By Leah Schnurr
NEW YORK, Aug 6 (Reuters) – Wall Street sagged on Tuesday,
pulling back further from recent records as investors found few
reasons to buy, while the dollar hit a six-week low against the
yen as investors tried to gauge when the Federal Reserve will
wind down its stimulus program.
With the U.S. earnings season slowing, a dearth of domestic
economic data this week and the focus on Fed policy, trading in
U.S. stocks has been muted. Monday marked the lightest volume
for a full session this year.
Comments from Fed officials left the market unsure about the
timing for a possible reduction in its bond-buying program.
Fed officials “are all hedging themselves, which is why the
market continues to just be a little bit confused and why it is
going to churn,” said Ken Polcari, director of the NYSE floor
division at O’Neil Securities in New York.
“There is really no reason at the moment for the market to
go higher because it is still too unclear,” he said.
Dennis Lockhart, president of the Federal Reserve Bank of
Atlanta, told Market News International that the Fed could begin
trimming the size of the stimulus program as soon as September,
but might wait longer if the expected economic growth in the
year’s second half fails to materialize.
The Chicago Fed’s Charles Evans, typically among the most
dovish of the policymakers, said the U.S. central bank will
probably reduce its bond purchases later this year and could do
so as early as next month.
The sole U.S. economic report of the day showed the trade
deficit narrowed sharply in June, suggesting an upward revision
to second-quarter growth. Stocks took no direction from the
data, though it did weigh on Treasuries prices.
The Dow Jones industrial average fell 83.82 points or
0.54 percent, to 15,528.31, the S&P; 500 lost 9.26 points
or 0.54 percent, to 1,697.88 and the Nasdaq Composite
dropped 26.731 points or 0.72 percent, to 3,666.22.
Europe’s broad FTSEurofirst 300 index broke a six-day
winning streak, closing down 0.4 percent, though the
index was supported by data showing strong growth at factories
in Germany and Britain.
An index of world stocks fell 0.3 percent.
The U.S. dollar fell against the yen for a third session as
investors speculated that the Fed may not pull back on its
quantitative easing as soon as had been expected in the wake of
last week’s disappointing jobs report.
The dollar fell as low as 97.51 yen, its lowest since
June 26. It last traded down 0.6 percent at 97.68 yen.
Expectations that the Bank of Japan, at its monthly policy
meeting this week, will refrain from embarking on more stimulus
measures also favored the yen.
“While the weakness of the dollar is pronounced against the
yen, it is a broad sell-off that has more to do with Fed policy
than BoJ policy,” said Charles St-Arnaud, foreign exchange
strategist at Nomura Securities in New York.
“This is symptomatic of how trading has been all summer,
with so much volatility and people looking to lock in profits
whenever they can,” he said.
U.S. Treasuries prices pared modest declines after solid
demand emerged for the U.S. Treasury’s $32 billion three-year
note auction, the first of three coupon auctions this week.
Benchmark 10-year Treasury notes were 1/32 lower in
price to yield 2.644 percent.
Oil prices tumbled after Iran’s newly elected President
Hassan Rouhani said he was ready to enter “serious and
substantive” negotiations over Tehran’s nuclear program,
reducing the geopolitical risk potential.
Brent Crude settled down 52 cents to $108.18 a
barrel, while U.S. crude dropped $1.26 to $105.30.
