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Closing Update: Stocks React Negatively to End to QE and Hawkish Fed Bias Towards Labor Market, Economy


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Wall Street limped into the close -- although finished off its worst levels -- after the Federal Open Market Committee officially ended its massive bond buying program as expected and made subtle changes to its policy statement. But some economists said the area describing economic conditions was a touch more hawkish than Wall Street expected, enough to send stocks lower Wednesday. The Dow Jones Industrial Average lost more than 100 points closely following the 2:00ET announcement, ending a four-day winning streak and briefly falling below its 50-day moving average. The S&P 500 and Nasdaq Composite also end in the red.

Citing a "substantial improvement" in the job market and underlying strength in the broader economy, the FOMC wrapped up Quantitative Easing (QE) but kept in the "considerable period of time" language regarding keeping interest rates low.

Noticeably absent, however, was mention of the weak European economy and recent downgrades in IMF global growth forecasts as well as geopolitical events that have encouraged cautious monetary policy. The equity markets were also spooked by the more hawkish bias towards the economy, specifically wording describing the "underutilization" in the labor market adjusted to "underutilization...gradually diminishing."

The outcome of the FOMC meeting also sent the dollar soaring against the majors, gold sharply lower, and the 10-year Treasury yield nearly 7 basis points higher to 2.37%.

Here's where the markets stand at the close:

US MARKETS

Dow Jones Industrial Index was down 31.44 (-0.2%) at 16,974.31

S&P 500 was down 2.75 (-0.1%) at 1,982.30

Nasdaq Composite Index was down 15.07 (-0.3%) at 4,549.23

GLOBAL SENTIMENT

FTSE 100 was up 0.81%

Nikkei 225 was up 1.46%

Hang Seng Index was up 1.27%

Shanghai China Composite Index was up 1.50%

UPSIDE MOVERS

(+) CARA Meets primary endpoint in study of IV pain drug

(+) SWI Beats earnings and revenue estimates, issues in-line guidance

(+) X Reported better-than-expected Q3 results

DOWNSIDE MOVERS

(-) STM Beat earnings estimates but missed on revenue

(-) ARCP Named a new CFO and CAO after announcing non-reliance on previously issued financial statement

(-) INVN Missed Q2 earnings and revenue estimates

(-) ORB, GY, ATK Antares rocket explodes on launch

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

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This article appears in: Investing , Commodities



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