Stocks Drop After Fed Official Says Interest Rates Could Rise

Stocks fell on Thursday as government data prompted downward revisions to U.S. economic growth in the second quarter and after the head of the Federal Reserve Bank of St. Louis said interest rates could increase sooner than expected. James Bullard told Fox Business Network that the U.S. economy is closer to normal levels than most people realize, and the first interest rate hike by the Fed could come at the end of the first quarter of 2015. The Dow Jones Industrial Average which dropped over 100 points during the morning, recovered and closed unofficially 21 points down. The S&P 500 dropped 2 points and the Nasdaq was marginally in the red. Earlier, the government reported jobless claims declined by 2,000 to 312,000 last week, in line with expectations. But another report had personal spending rising a less-than-forecast 0.2 percent in May, after holding flat in April, and personal income rising 0.4 percent.

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IN DEPTH

• Weekly Jobless Claims Fall, Points to Strengthening Labor Market
• Economy Seen Bouncing Back This Year After Temporary Bump in Road

• U.S. Economy Contracted Almost 3 Percent in First Quarter

- Kate Gibson, CNBC.com