The U.S. stock market plunged in afternoon trading on
Wednesday after Federal Reserve Chairman Ben Bernanke said that
the central bank could begin tapering its quantitative easing
program later this year amid optimistic signs for the
He added that the Fed intends to end the current bond-buying
program by the middle of next year if the unemployment rate
continues to tick lower. The comments seemingly caught some
market participants off guard and investors sold stocks on
concerns about easing liquidity.
Volatility was also high in bond and currency markets with the
U.S. Dollar rising sharply and Treasury prices stumbling on
expectations that the Fed will exit the market in the
The Dow Jones Industrial Average fell 206 points, or 1.35
percent, to close at 15,112.
The S&P 500 lost 23 points, or 1.39 percent, to 1,629.
The Nasdaq shed 39 points, or 1.12 percent, to 3,443.
FOMC Rate Decision
In a press conference in conjunction with the FOMC rate
decision, Federal Reserve Chairman Ben Bernanke said that the
central bank could begin tapering its current $85
billion-per-month bond-buying program later this year amid signs
of a strengthening economy.
The Fed, however, took no immediate action and officials voted
to keep the program unchanged for the time being. The Fed also
kept its benchmark interest rate unchanged at 0.25 percent and
reiterated its commitment to keeping rates near zero until the
unemployment rate comes down to 6.5 percent.
Crude oil prices fell along with the stock market on
Wednesday. Near the close of equities, NYMEX crude futures were
down 0.71 percent to $97.74. Brent crude futures had lost 0.34
percent and were last trading at $105.66. Natural gas rose around
1.28 percent on the day to $3.96.
Precious metals also traded slightly lower on the day. At last
check, COMEX gold futures were down 0.50 percent to $1,360.00.
Silver contracts had lost 0.84 percent and were trading at
$21.50. Copper lost 0.57 percent on the session to $3.1495.
In the grains complex, both corn and wheat were up sharply.
Corn futures had climbed 3.63 percent while wheat was trading up
a little less than 3 percent. Movers in soft commodities included
sugar and orange juice. Sugar futures climbed 1.35 percent while
orange juice concentrate contracts lost 1.68 percent.
Bonds fell along with stocks on Wednesday. Near the close of
equities, the iShares Barclays 20+ Year Treasury Bond ETF (NYSE:
) was down 1.11 percent to $112.02. Yields rose on the session as
prices traded lower.
The 2-Year Note yield was most recently at 0.30 percent. The
yield on the 5-Year Note was at 1.24 percent on Wednesday. The
10-Year Note and 30-Year Bond were yielding 2.33 percent and 3.41
The U.S. Dollar rose sharply intra-day after Fed Chairman Ben
Bernanke said that the central bank could begin tapering its
bond-buying program later this year. At last check, the
PowerShares DB US Dollar Index Bullish ETF (NYSE:
), which tracks the performance of the greenback versus a basket
of foreign currencies, was up 1.05 percent to $22.08.
The closely watched EUR/USD pair was last trading down nearly
1 percent to $1.3272. Other movers included the USD/JPY, which
jumped 1.18 percent, and the GBP/USD, which was last trading down
more than 1 percent. The AUD/USD also plummeted 1.54 percent on
the session amid significant volatility in currency markets
related to commentary from the Fed.
Volatility and Volume
Despite a significant sell-off in the stock market, the VIX
actually fell on the session as uncertainty surrounding the Fed
resolved itself. The closely watched barometer of volatility
expectations was trading down 1.57 percent to 16.35 late in the
Volume was heavier than normal as traders and investors
reacted to commentary from Fed Chairman Ben Bernanke. Around 167
million SPDR S&P 500 ETF (NYSE:
) shares traded hands compared to a 3-month daily average of 134
Adobe Systems (NASDAQ:
) was trading up a little less than 6 percent on Wednesday after
the company released its fiscal second-quarter earnings results
on Tuesday after the closing bell.
Nektar Therapeutics (NASDAQ:
) had climbed around 12 percent after the biotech firm reported
positive top-line results for its experimental opioid drug
NKTR-181 to treat chronic pain.
Biotech company MannKind (NASDAQ:
) added more than 6 percent on Wednesday a day after falling
sharply in the wake of announcing it has completed a Phase III
study of its diabetes drug candidate Afrezza.
Keryx Biopharmaceuticals (NASDAQ:
) jumped almost 8 percent on the day after the stock was
initiated at JPMorgan with an Overweight rating and $13 price
Tetra Tech (NASDAQ:
) fell almost 14 percent on Wednesday after the company said it
expects to post a loss for its fiscal third-quarter.
) fell around 6 percent after lowering its 2013 earnings
Vitesse Semiconductor (NASDAQ:
) lost more than 17 percent after announcing a $40 million share
) fell more than 9 percent after announcing a share offering.
(c) 2013 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
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