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Dow at 2-week low ahead of Yellen speech Friday

Adam Shell
USA TODAY

The stock market fell Wednesday as investors embraced a wait-and-see approach ahead of a key speech Friday from Federal Reserve Chair Janet Yellen.

This July 9, 2015 photo shows a Wall Street sign near the New York Stock Exchange in New York.  (AP Photo/Seth Wenig)

The Dow Jones industrial average finished down 0.4%, to a two-week low. The Standard & Poor's 500 stock index dropped 0.5% and the Nasdaq composite tumbled 0.8%.

At the moment, there are not a lot of market-moving data points to get investors actively involved in the market. Second-quarter earnings season -- which wasn't as bad as feared despite the S&P 500 suffering its fourth straight quarter of negative profit growth -- is winding down. And there was only one key economic data point released today: Existing home sales came in disappointing, with sales down 3.2% in July to an annualized rate of 5.39 million. Economists were expecting sales at an annual rate of 5.5 million units, down from 5.57 million units in June.

Existing home sales tumble amid low inventory, higher prices

Wall Street, however, is eagerly awaiting a key speech on monetary policy by Yellen Friday at a closely watched central bankers meeting in Jackson Hole, Wyoming. Investors will be listening to any clues from Yellen regarding the timing of the next interest rate hike. The Fed last hiked rates back in December, which was their first rate increase in nearly a decade and moved rates off of zero.

Many Fed officials in recent weeks have been pushing for a rate hike sooner rather than later, creating a fresh round of Fed handicapping by financial markets. Wall Street is still betting that the Fed will move at its last meeting in December, at the earliest. So an earlier hike could cause market havoc as investors' portfolios are not positioned for a near-term rate increase.

"The market is becoming increasingly nervous about Yellen's upcoming speech after several Fed members (suggested) that the Fed was on its way to finally pushing the button" and raising rates, Arnaud Masset, market analyst at Swissquote Bank, told USA TODAY via email.

The stock market is also being dragged down by a drop in the price of U.S.-produced crude, which is down 1.6% at $47.31 a barrel.

Heading into Wednesday's session, the S&P 500 was within 0.15% of a new record high, the Dow was just 0.5% off its all-time high and the Nasdaq was 0.3% short of a new record.

Equities were generally higher around the globe. The broad Stoxx Europe 600 index was 0.4% higher and Japan's Nikkei 225 closed up 0.6%.

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