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U.S. stocks fall on Fed move, emerging markets; Dow slips 1.19%

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Investing.com -

Investing.com - U.S. stocks fell on Wednesday after the Federal Reserve said it was cutting its monthly bond-buying stimulus program to USD65 billion from USD75 billion, while ongoing turmoil in emerging markets also pushed stocks lower.

At the close of U.S. trading, the Dow Jones Industrial Average fell 1.19%, the S&P 500 index fell 1.02%, while the Nasdaq Composite index fell 1.14%.

The Federal Reserve on Wednesday left its benchmark lending target, the fed funds rate, unchanged at 0.00%-0.25% and trimmed USD10 billion from its USD75 billion monthly asset-purchasing program in place to spur recovery.

The Fed is now purchasing USD65 billion in Treasury holdings and mortgage debt a month to help make broader financial conditions more accommodative in order to strengthen recovery.

Economic activity is picking up, the labor market is making some improvement, while recent congressional inability to agree on spending packages is still dragging on recovery albeit less nowadays due to recent compromises.

Such a scenario prompted monetary authorities to taper the Fed's monthly bond purchases, which aim to push down long-term interest rates to boost the economy and send investors to stocks to fuel more corporate investing and hiring.

While talk of tapering the program reflects a view that the economy is improving, it also creates uncertainty as to how stocks will react without a monetary crutch, especially at a time of uncertainty in emerging markets across the globe.

Leading Dow Jones Industrial Average performers included DuPont, up 1.92%, Microsoft, up 1.12%, and Verizon, up 0.63%.

The Dow Jones Industrial Average's worst performers included Boeing, down 5.17%, Coca-Cola, down 2.51%, and Home Depot, down 2.35%.

European indices, meanwhile, finished lower.

After the close of European trade, the EURO STOXX 50 fell 0.81%, France's CAC 40 fell 0.68%, while Germany's DAX 30 fell 0.75%. Meanwhile, in the U.K. the FTSE 100 finished down 0.43%.

On Thursday, the U.S. is to publish preliminary data on fourth-quarter economic growth. The nation is also to release the weekly report on initial jobless claims and data on pending home sales.

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


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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