The U.S. stock market on Thursday suffered its biggest one day point drop since November 2011 as investors continued to react negatively to the prospect that the Federal Reserve will begin easing off its easy money policies later this year.
At the closing bell the Dow Jones Industrial Average was down 353.87 points or 2.3 percent. This was the biggest one day point drop since Nov. 9 2011 when the Dow plunged 389 points. Thursday s drop followed Wednesday s decline of more than 200 points.
Continue ReadingOn Wednesday Fed Chairman Ben Bernanke said the central bank will continue its effort to stimulate the economy but that the Fed plans to start dialing back its bond buying program later this year and conclude it next year as long as the unemployment rate heads down toward 7 percent.
Yesterday he basically at the press conference said if the data continues to improve we will see tapering. And the market s reaction has been swift said Quincy Krosby a market strategist for Prudential Financial. They understand that all things have to come to an end. The market always moves quickly and decisively and moves well before the Fed actually acts.
The Nasdaq was also down 78.56 points or 2.3 percent on Thursday while the SP 500 index was down 40.73 points or 2.5 percent.
Bernanke emphasized that the reason the Fed could begin consider pulling back on its $85 billion per month bond buying program is because the economy is improving particularly the housing market. He emphasized that if this brightening picture begins to dim the Fed would reassess any plans to ease off its stimulus program.
There s a repricing going on and the market will find an equilibrium Krosby said though she warned that this will likely take a while.
Jon Prior contributed to this report.
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