Stocks Drop on Concern Fed Support Waning for Stimulus
NEW YORK ( TheStreet) -- U.S. stocks declined Wednesday as the Federal Reserve opted to maintain its current $85 billion bond-buying program and keep interest rates at current low levels, citing an elevated jobless rate and a slowdown in the housing market's recovery.
Markets fell on concerns the Fed may still pullback on its stimulus program in December, or early next year. In a policy statement, the central bank said that overall all "the downside risks to the outlook for the economy and the labor market" .... have "diminished," indicating that the worst of the 2009 recession, which prompted the stimulus program has passed.
TheS&P 500 closed down 0.49% to 1,763.30. The Dow Jones Industrial Average lost 0.39% to 15,618.64, while the Nasdaqdropped 0.55% to 3,930.62.
The Fed dropped language about concerns that financial market tightening could present a drag on economic growth.
"Folks are saying, 'OK, look, the Fed was uncomfortable with the 10-year [Treasury] rate when it was 2.75%, 2.8%, but [the central bank] is comfortable with it at 2.45%,'" Thomas Tzitzouris, head of fixed income research at Strategas Research Partners, said in a phone interview from Washington. "And we've been buying on the expectation that the Fed was not comfortable with the levels we were at, and so maybe its time to take some profit."
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