U.S. stocks fall after Fed comments

Yahoo (Reuters) ^ | Wednesday January 28, 2:27 pm ET | Reuters staff

[The_Victor]

(Updates with Fed comments)

NEW YORK, Jan 28 (Reuters) - Stocks fell on Wednesday after the Federal Reserve, as widely anticipated, said it will leave interest rates unchanged at 45-year lows, but made comments that indicated it might be closer to a rate hike.

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The U.S. Federal Reserve opted on Wednesday to hold interest rates at 1958 lows to keep the economic recovery rolling. But it changed its wording on the future of rates slightly to say it can "be patient" before lifting borrowing costs.

Low rates are good news for stock prices and the economy, since they help fuel corporate earnings growth by keeping a lid on borrowing costs.

After the Fed's comments, the Dow Jones industrial average (^DJI - News) fell 66 points, or 0.62 percent, to 10,544. The Standard & Poor's 500 Index (CBOE:^SPX - News) was down 7 points, or 0.62 percent, at 1,137. The technology-laced Nasdaq Composite Index (NasdaqSC:^IXIC - News) dropped 17 points, or 0.80 percent, to 2,099.

[expat_panama]

The market places way too much credence in the words of one man.

Shutup FED. You guys talk too much."

Watching the market consensus is like watching fish in a tank-- all one way and then all the other.  I feel like yelling "when ever you kids are through, the adults here would like to get some work done!".

[jveritas]

Wall Street is full of idiots. They act on emotions much more than rational. How can someone react in such crazy and irrational fashion based on "remain to be patient" statement from the Feds. The fact remains that the Feds have kept the interest rate at the lowest level in 46 years but Wall Street is hanging up on one meaningless statement. I just cannot believe this, what do these morons in Wall Street want to hear....

[expat_panama]

I always had my reservations about 'Sir Alan' ever since he posted that extremely pessimistic gdp report right before election day of '92 --only to revise it way up afterwards.

[wardaddy]

Well, at least he's not on an irrational exuberance kick.

I would bet the markets will be back up some quite soon.

I see no good reason yet to even hint at hikes...if anyone here feels otherwise (besides the Goldbug/doomgloomers) please feel free.

[LurkingSince'98]

Pardon! Momento! Excusa!

Where did you get the idea that the Federal Reserve sets the rates?

Sorry! The market sets the interest rates all the Fed can do is print more or less money to try to effect the rates.

Nice Try!

Regards,
Lurking'

[expat_panama]

Exactly. I get all grumbly when the indexes dip, forgetting that I can only sell high after having bought low. As luck would have it I've been waiting for precisely this buying opportunity -- having just opened a new margin account with Ameritrade...

[expat_panama]

idea that the Federal Reserve sets the rates?

They do set the discount rate, which has a lot of influence.

[tomahawk]

Greenspan is the worst Fed chairman ever. He did in GHW Bush and now he'll do in GW Bush.

[justshutupandtakeit]

You nailed it. As others have pointed out there will no rate hikes for months or more. There is no real concern about the dollar's weakness since that will fuel the recovery and force the Europeans to aid it.

[LurkingSince'98]

"They do set the discount rate, which has a lot of influence."

A lot of influence is like close in horseshoes - its good most of the time, but when push comes to shove the Fed will be following the curve in a major attempt to catch-up.

It is more than a little comforting to know that the Fed doesn't run everything. The problems is that they have influenced everything (your words) to the point that when the break comes their leverage will be gone.

Regards,
Lurking'

[Publius Maximus]

The market places way too much credence in the words of one man.

There is no small irony in the fact that this particular 'one man' is a devotee of Ayn Rand, whom some on this board value higher than George Washington. I think Alan has an Atlas complex, and loves the media attention every time he, er, shrugs.

Radical libertarians are as liberal authoritarians do.

[justshutupandtakeit]

And the federal funds rates.

[TBall]

The market has moved a long way in a short time. Would not be surprised if this was the start of a more substantial correction. Not necessarily a bad thing.

[wardaddy]

I carry a shiteload of commercial real estate mortgages, save the cute nuance for someone else.

Nice Try!

Regards,

Wardaddy

[expat_panama]

a more substantial correction

Would you say that this news is bigger than anything that's happened in the last six months and would justify changing six-month support levels?

[what's up]

Cisco already has had a 10% or so correction from its high. Cisco is a bellweather in the tech area. I predict there will be not a whole lot more downside.

[spokeshave]

Yes but look at the graph....big uptick in final minutes on MASSIVE BUYING.

Its just another buying opportunity..

= TDIDS

[SquirrelKing]

This is nothing unexpected. As of the end of last fall the market was acknowledging that the great "refi boom" was all but over and I have been conditioning my clients for just that. By omitting the promise the Fed is just preparing the field for the inevitable rate increase that we all know is coming. This, at least, will make it easier to digest rather than having everything be all hunky-dory and then have the rug ripped out from under us.

[TBall]

This news was nothing and the market was looking for an excuse to sell. I would not be surprised at all to see the DJIA bottom out around 9800 over the next few weeks.

[CasearianDaoist]

Yes, and better to do it now.