Closing Update: Traders See End To Fed Stimulus Following FOMC, Bernanke Statements, Sending Stocks Lower

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Stocks finished solidly lower Wednesday, with small mid-day losses accelerating despite the Federal Reserve promising to maintain its current stimulus policies as long as necessary. Equities had been drifting slightly underwater through most of the morning following two days of solid gains only to turn south after the Federal Open Market Committee statement at 2 p.m. and remarks by Fed Chairman Ben Bernanke the central bank could start cutting back on its bond-buying program late this year if conditions continue to improve. All 10 sectors in the S&P 500 ended lower, with the steepest slides for shares of utility and consumer staples companies.

Bernanke said on Wednesday the central bank expects to slow the pace of its bond purchases later this year "if the subsequent data remain broadly aligned with our current expectations for the economy," and bringing the program to an end by mid-2014. While those remarks are little different from current expectations for Fed policy, a clear statement of what conditions would trigger the central bank pulling the punchbowl still left traders in a sour mood.

In other remarks, Bernanke said the Fed expects moderate growth to lead to continuing healing in the job market as headwinds facing the economy ease. He also said policymakers expect inflation to move back up toward their long-term 2 percent goal.

The FOMC statement also was slightly more upbeat than its recent statements. "The committee sees the downside risks to the outlook for the economy and the labor market as having diminished since the fall," it said.

Commodities were mixed. July crude oil fell 21 cents to $98.25 per barrel while July natural gas rose 6 cents to $3.96 per 1 mln BTU. August gold rose $7.73 to $1373.80 per ounce while July silver fell 7 cents to $21.61 per ounce. July copper fell a penny to $3.14 per pound.

Here's where the U.S, markets stood at end-of-day:

Dow Jones Industrial Average down 206.04 (-1.35%) to 15,112.19

S&P 500 down 22.88 (-1.39%) to 1,628.93

Nasdaq Composite Index down 38.98 (-1.12%) to 3,443.20

GLOBAL SENTIMENT

Hang Seng Index down 1.13%

Shanghai China Composite Index down 0.73%

FTSE 100 Index down 0.40%

UPSDIE MOVERS

(+) NKTR, Drug-maker says it is close to developing an opioid analgesic molecule that alleviates pain but does not lead to substance abuse of the drug.

(+) MNOV, Presents positive data for a prospective treatment for methamphetamine addition. The company also said preliminary results indicate its MN-166 drug candidate does not cause significant changes in cardiovascular functioning.

(+) AVHI, Private-equity firm TPG pays $14.65 a share - or 37.5 mln overall - to acquire 2.6 mln shares of the homebuilder's common stock along with another $97.5 to purchase 700,000 newly created Series A convertible preferred shares. TPG will gain a 41.9% stake from the $135-mln transaction and have two of the eight seats on the AVHI board.

DOWNSIDE MOVERS

(-) BIOD, Announces plans to sell a yet-to-be-determined number of shares of common stock, subject to market conditions and other factors.

(-) POOL, Reduces FY13 EPS guidance by $0.10 to new range of $2.03 to $2.13 per share, trailing the Street view by at least $0.08 per share.

(-) TTEK, Revises Q3 outlook to reflect rising restructuring costs, now projecting a net loss of $0.30 to $0.50 per share compared with the $0.38 per share profit analysts are expecting. Also cuts revenue forecast by about 15% to $440 mln to $490 mln. The Street is at $551 mln. It also authorizes a $100-mln stock buyback program.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

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This article appears in: Investing , Commodities

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