US stocks fall as markets absorb FOMC decision
Stocks on the American exchanges fell as market participants continued to speculate about the Federal Open Market Committee’s latest policy announcement. The Fed stuck to its guns Wednesday, opting to hold the pace of monthly asset purchases at $85 billion.
Although the Fed surprised no-one with its latest policy decision, the central bank “was a little more hawkish than people expected,” said Andres Garcia-Amaya of JPMorgan Chase. Economists surveyed by Bloomberg believe the Federal Reserve will maintain its current pace of asset purchases until at least March 2014, but some market participants are weary the central bank could reign in record stimulus before that time. The central bank’s official press release made no direct mention of the 16-day government shutdown, and showed signs it was comfortable with current lending rates.
According to economists at Citigroup (NYSE:C) and Barclays (NYSE:BCS) , the Fed’s latest policy statement leaves the door open to bond tapering as early as December. Citigroup said almost half of its economists believe a taper will occur in January.
US stocks failed to generate momentum as the earnings quarter continued in full-swing. Dow Jones Industrial Average newcomer Visa Inc lost 3.51 percent after revenues missed forecasts. Avon Products fell a whopping 21.87 percent after the cosmetics seller posted a net loss in Q3.
The Dow fell 73 points to 15,545.80, after 21 of its 30 members declined. VISA was the Dow’s biggest loser, followed by JPMorgan Chase and American Express, which fell at least 1.56 percent. The Standard & Poor’s 500 slumped for the second consecutive day, falling 0.28 percent to 1,756.64.
Federal Reserve speculation will dominate discourse over the next six weeks as market participants determine how long stocks will continue to be supported by record stimulus. The Fed’s last rate decision of the year will come our way December 18 after the FOMC wraps up its two-day meetings. Job growth, business activity and consumer confidence will likely dictate the extent to which the Fed supports a policy shift in the new-year.
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