U.S. Stocks Decline as Investors Crave More Guidance From Fed

Story by Bloomberg
Written by Sofia Horta E Costa and Kate Garber

Confusion over the Federal Reserve’s stimulus policy prevailed among investors, sending the Standard & Poor’s 500 Index to its lowest level in three weeks.

Raw-material producers and industrial companies were among the hardest hit as anxiety about global growth continued to smolder. Monsanto Co. and Freeport-McMoRan Inc. lost more than 2.6 percent. Caterpillar Inc. tumbled 6.6 percent after reducing its full-year sales forecast with plans to cut as many as 5,000 jobs. Boeing Co. and General Electric Co. declined at least 1.4 percent amid data showing orders for business equipment stalled.

The S&P 500 dropped 1.2 percent to 1,916.28 at 11:58 a.m. in New York, sliding for the fifth time in six days since the Fed cited turbulence in financial markets as reason to stand pat on interest rates. The Dow Jones Industrial Average fell 212.05 points, or 1.3 percent, to 16,067.84. The Nasdaq Composite Index declined 1.4 percent. Trading in S&P 500 companies was 5 percent below the 30-day average for this time of day.

“The Fed backed themselves into a corner last week by talking about China and emerging markets,” said Andrew Brenner, the head of international fixed income for National Alliance Capital Markets. “The fact that they’re adding China and emerging markets into the mix and then still thinking about raising rates between now and the end of the year is very inconsistent. It adds uncertainty to the market. That’s why equities have been performing poorly since mid-day of the Fed announcement.”

Uncertainty over the Fed’s actions has made equities more volatile in past weeks. The central bank held off raising rates last Thursday and said it would consider spillover risks from global markets. Fed officials have since said a 2015 increase is still warranted. Traders may get more clarity when Chair Janet Yellen speaks in Massachusetts after markets close.

Read More: http://www.bloomberg.com/news/articles/2015-09-24/u-s-index-futures-drop-before-data-with-s-p-500-near-3-week-low