US Fed likely to increase interest rate as Wall St. stocks plunge

U.S. stocks have plummeted lower, leaving investors glued to the Federal Reserve's policy meeting this week. As stocks are expected to remain volatile, Federal Reserve is all set to decide whether an increase interest rate has to be introduced. Investors are also worried about China’s fallen stocks.

If Federal Reserve is to announce an increase, then it would be the first time in nine years. David Spika, the global investment strategist for the GuideStone Funds in Dallas, has expressed uncertainty over the U.S. stocks and believes that everyone was glued to the Federal Reserve’s announcement. "There's absolutely no conviction up or down. Everybody's waiting on the Fed,” she said.

The Fed has said that it will not likely to increase the interest rate unless there’s recovery of the weak economy with regard to jobs and inflation. However, as oil prices have plunged, inflation has since improved.

U.S. stocks have dropped since China devalued its currency in August. "Because of the volatility in the market and the conflicting data points on the U.S. economy, it's really difficult to get a firm handle on what the Fed's likely to do," Spika added.

According to Thomson Reuters data, trading was slow with just 5.4 billion for the last session, whereas the previous 20 sessions, the average share was around 8 billion daily.

China’s economic growth rate has the chances of slipping below 7 percent, recording a historic low since the global crisis as China’s factory output and investment missed forecasts in August.

Chris Bertelsen, the chief investor officer of Global Financial Private Capital in Florida, have argued that although the country’s weak economy could be regulated in more than one ways, investors continue keeping an eye on China for a bottom in regard to the country.

Stock plunge:

· The Dow Jones industrial average – fell 38 percent (lost 62.13 points to 16,370.96)

· S&P 500 – fell 0.41 percent (lost 8.02 points to 1,953.03)

· the Nasdaq Composite Index - fell 0.34 percent (lost 16.58 points to 4,805.76)

Apple shares ended up 0.96 percent at US$115.31 (AUD$161.68) after iPhone pre-orders were on track.

NYSE decliners outnumbered advancers 2,044 to 971, for a 2.11-to-1 ratio. The S&P 500 posted two new 52-week highs and six lows; the Nasdaq recorded 42 new highs and 72 lows.

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