U.S. Stocks Lower but Less Volatile Day After Big Plunge

stock market traders new york stock exchange federal reserve stimulus
Richard Drew/AP
By JOSHUA FREED

Wall Street steadied after a two-day plunge caused by news that the Federal Reserve was getting ready to wind down its massive bond-buying program by mid-2014.

Markets were a lot calmer Friday. The Dow Jones industrial average (^DJI) was down 24 points, or 0.2 percent, at 14,732 as of 11:24 a.m. Eastern Daylight Time. The Dow and other indexes were moving between small gains and losses in early trading.

The Dow plunged 560 points Wednesday through Thursday, wiping out its gains from May and June. The Fed's easy money policies have been a big driver behind the stock market's bull run the last four years. The plunge came just three weeks after the Dow hit a record high of 15,409.

The Standard & Poor's 500 index (^GSPC) fell six points, or 0.4 percent, to 1,582 points. The S&P hit its own record high a month ago.

Kim Forrest, senior analyst with Fort Pitt Capital Group, a portfolio management firm in Pittsburgh, said the market had the "right reaction" to the news that the Fed would wind down its stimulus if the economy continues to improve, but the move may have been overblown.

"We're getting news that made the market uncomfortable," she said. "We shouldn't be sitting at these highs given the fact that the Fed signaled that someday it's going to take some liquidity off the table. So the reaction is right, the magnitude is probably a little off."


The yield on the 10-year Treasury note rose to 2.49 percent from 2.42 percent late Thursday. The yield has risen sharply since Wednesday as investors sold bonds in anticipation that the Fed would slow, and eventually end, its bond purchases.

The yield, which is a benchmark for interest rates on many kinds of loans including home mortgages, is at its highest level since August 2011. On Tuesday, the day before the Fed's announcement, it was 2.19 percent. It hit a low for the year of 1.63 percent on May 3.

Technology shares fell more than the rest of the market after business software maker Oracle reported disappointing earnings late Thursday. Oracle plunged $3.04, or 9 percent, to $30.17, the biggest drop in the S&P 500 index. Oracle is struggling to adapt as customers shift away from software installed on their own computers toward software that runs remotely.

Oracle's results are a poor omen for business spending on technology. Technology stocks in the S&P index fell 1 percent, the most of the 10 industry groups in the index.

The Nasdaq composite index (^IXIC), which is heavily weighted with technology stocks, fell 30 points, or 0.9 percent, to 3,333. Apple, the biggest stock in the index, fell $8.15, or 1.9 percent, to $408.75. Microsoft fell 26 cents, or 0.8 percent, to $33.23.

The price of gold recovered after plunging the day before. Gold was up $6.40, or 0.5 percent, to $1,292.40 an ounce. Crude oil fell $1.15, or 1.2 percent, to $94 a barrel in New York.

The dollar rose against other currencies as traders anticipated that U.S. interest rates would rise as the Fed winds down its bond purchases.

Among other stocks making big moves:
  • Darden Restaurants (DRI), which runs Olive Garden and Red Lobster, fell $1.16, or 2.3 percent, to $50.07 after rising expenses hurt its fourth-quarter earnings.
  • CarMax (KMX), which runs used car dealerships, reported that its first-quarter profit jumped 21 percent as sales rose. Its stock rose 63 cents or 1.4 percent, to $45.20.
A Fed policy statement and comments from Fed Chairman Ben Bernanke started the selling in stocks, bonds and commodities Wednesday. Bernanke said the Fed expects to scale back its bond-buying program later this year and end it by mid-2014 if the economy continues to improve. The bank has been buying $85 billion a month in Treasury and mortgage bonds, which has made borrowing cheap for consumers and businesses. The program has also encouraged investors to buy stocks instead of bonds.

The S&P 500 is still up 11.9 percent, for the year, not far from its full-year increase of 13.4 percent last year.

Overseas, Japan's Nikkei index rose 1.7 percent, but other Asian markets fell. European markets slipped. France's CAC-40 fell 0.3 percent and Germany's DAX fell 0.9 percent.


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11 Comments

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sandi

how many of you think this economy can stand on its' own 2 feet.
i.e. no more QE's , no more 86B/mo MBS buying

June 21 2013 at 4:19 PM Report abuse +1 rate up rate down Reply
1 reply to sandi's comment
thefacts22

The cronies in Wall Street KNOW that very well

June 21 2013 at 4:40 PM Report abuse rate up rate down Reply
rocknrollcapt

i guess its just a manuver for the manipulators to make the weaker invester sell so they can profit. it goes on all the time. just like when ford common stock went to around a dollar a share i wish i would have had the nerve to buy but i didnt oh well at least i didnt lose any money.

June 21 2013 at 3:09 PM Report abuse +1 rate up rate down Reply
1 reply to rocknrollcapt's comment
thefacts22

Wall Street is today a rat,s nest.....I bought FORD,made good for me......a big gambling Casino......

June 21 2013 at 4:44 PM Report abuse rate up rate down Reply
mjeffries10

If one were to graph the increase in housing from 2002 to 2007 and see the bubble spike then it's easy to calculate the fair market value for houses.. Considering an average slope of 6% in Silicon Valley, then the hockey stick appreciation, simply back track and like Moore's Law draw a line to where it should be... This can be done with stocks... But one has to go all the way back to 1998, when the artificial bubble created by the CDO influence in the market began to inflate.. Simply calculate the slope and draw the line... That's where the markets will find their fair market value...

June 21 2013 at 2:17 PM Report abuse rate up rate down Reply
1 reply to mjeffries10's comment
thefacts22

All I do is follow the money trail.......I only buy,what I know at low...and sell.....Someday it will explode........

June 21 2013 at 4:49 PM Report abuse rate up rate down Reply
wongtpa

Investors are finally realizing that there is no Obama recovery. It is just more of the same dog and pony show the lame stream media has fed the uninformed investors and voters!

June 21 2013 at 2:11 PM Report abuse rate up rate down Reply
1 reply to wongtpa's comment
thefacts22

Trust me,the investors know that very well,there are lots of little Soros around.....Real big people is moving big money OUT of USA,using front ghost Corp......Why do you think the EURO is strong?...Obama is just an incompetent clown

June 21 2013 at 4:55 PM Report abuse +1 rate up rate down Reply
wongtpa

Correction ongoing . Look out below, here comes 13000!!!!!

June 21 2013 at 2:10 PM Report abuse rate up rate down Reply
thefacts22

I wonder HOW MUCH MORE we will have to pay to "service"our NATIONAL unsustainable debt...The NEW socialists cronies thiefs at Wall Street had to plunge tons of money to save the day...I sold today at a little profit,and I am happy....but.....We are doomed

June 21 2013 at 2:00 PM Report abuse rate up rate down Reply
1 reply to thefacts22's comment
geoffandmarie418

How right you are in saying we are doomed, Americans fight one another instead of standing by one another, the first sign of a doomed society!! With Good jobs/careers still going overseas, with 48% ( nearly half of the population on food stamps), with commodity prices going up every other week, more and more people making less than what they did a few years ago, well one can see where this is heading!!

The writing is on the wall, someday America will fall!! no not completely, no we won't be a third World nation, but our days as top dog is well " Gone with the wind".

June 21 2013 at 4:29 PM Report abuse +1 rate up rate down Reply
1 reply to geoffandmarie418's comment
thefacts22

Just hope we can kick out all this rabble in 2016

June 21 2013 at 4:57 PM Report abuse rate up rate down