Rate-Rise Fears Trip Up Markets

The wave of selling shattered weeks of summer torpor and was a reminder of the extent to which long-running rallies in stocks and bonds are reliant upon continued support from central banks. The European Central Bank damped market sentiment on Thursday by deciding to leave its bond-buying and interest-rate policies unchanged, rather than expanding them as some investors had hoped. An official with the Federal Reserve deepened concerns by suggesting Friday that the Fed still might raise interest rates even after a week of relatively weak U.S. economic data. "A reasonable case can be made for continuing to pursue a gradual normalization of monetary policy," Federal Reserve Bank of Boston President Eric Rosengren said in a speech.