Dow closes down 5, Nasdaq finishes up 2
Aug. 22, 2006

A Federal Reserve official's warning about a possible resumption of interest rate hikes rattled Wall Street Tuesday, wiping out an early advance and leaving stocks narrowly higher by the close.

The comments by Chicago Fed President Michael Moskow unnerved investors looking to revive last week's rally after having collected profits on Monday. Retailers and other sectors dependent on consumer spending stumbled after Moskow said, "some additional firming of policy may yet be necessary to bring inflation back into the comfort zone within a reasonable period of time."

The Fed left interest rates unchanged earlier this month after raising them 17 straight times. Wall Street has rallied since then on hopes this would be the end, but one analyst said Moskow's comments could be "putting out a trial balloon" to gauge the market's reaction to a continuation of rate hikes.

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