Wall Street slid after a US Federal Reserve official fuelled concern that the central bank might raise interest rates sooner than anticipated.
In an interview with Fox Business Network, St Louis Fed President James Bullard said the US economy is doing much better than most realise. While admitting the larger-than-expected contraction in first-quarter gross domestic product gave him "heartburn", Bullard also suggested it was not indicative of the economic outlook.
"It looks like the first quarter was an aberration," Bullard said. "You are basically going to be near normal on both dimensions basically later this year. That's shocking, and I don't think markets, and I'm not sure policymakers, have really digested that that's where we are."
Bullard predicts the central bank will lift its benchmark rate by the end of in the first quarter of 2015.
"The [Federal Open Market] Committee currently anticipates that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run," according to a Fed statement earlier this month.