Stocks close lower as Fed official signals higher rates

US stock markets closed with losses on Wednesday to end the month of August on a lower note after a Federal Reserve official signaled higher interest rates in coming meetings.  

"My current view is that it will be necessary to move the Fed funds rate up to somewhat above 4% by early next year and hold it there," Loretta Mester, head of the Cleveland, Ohio Federal Reserve Bank, said earlier Wednesday. 

“I do not anticipate the Fed cutting the fed funds rate target next year," she told the chamber of commerce for the city of Dayton, Ohio. 

The Fed's benchmark interest rate currently stands in the target range of 2.25%-2.5%. 

The Dow Jones fell 280 points, or 0.88%, to end the day at 31,510. The blue-chip index shed 4.1% in August. 

The S&P 500 declined 31 points, or 0.78%, to finish at 3,955. It lost 4.2% for the month. 

The Nasdaq lost 66 points, or 0.56%, to close the day at 11,816. During August, the tech-heavy index plummeted by 4.6%. 

The VIX volatility index, also known as the fear index, fell 1.1% to 25.93. The 10-year US Treasury yield jumped 1.7% to 3.164%. 

While the dollar index was almost flat at 108.73, the euro was up 0.3% to $1.0045 against the dollar. 

Precious metals continued their decline, with gold falling 0.8% to $1,710 and silver plummeting 2.4% to $17.98. 

Oil prices were down almost 3%. Global oil benchmark Brent crude was at $95.04 per barrel, a 2.8% decline, while US benchmark West Texas Intermediate (WTI) was around $88.95 a barrel – a 2.9% loss.