Dow Jones:12,109.67 (–80.34) Nasdaq:2,669.19 (–18.07) S&P 500:1,287.14 (–8.38)
US STOCKS fell yesterday, halting a four-day rally, after the Federal Reserve lowered its forecast for economic growth and said it plans to finish its $600 billion bond purchase program this month as scheduled.
Adobe Systems, the largest maker of graphic-design software, slumped 6.3 per cent after forecasting profit below analysts’ estimates.
FedEx, operator of the biggest cargo airline and considered a proxy for the economy, added 2.6 per cent after forecasting earnings that may top analysts’ estimates.
The Dow Jones industrial average slid 80.34 points, or 0.66 per cent, to 12,109.67.
The Standard & Poor’s 500 Index dropped 8.38 points, or 0.65 per cent, to 1,287.14.
The Nasdaq Composite Index tumbled 18.07 points, or 0.67 per cent, to 2,669.19.
“The committee will complete its purchases of $600 billion of longer-term Treasury securities by the end of this month and will maintain its existing policy of reinvesting principal payments from its securities holdings,” the Federal Open Market Committee said yesterday.
“The economic recovery is continuing at a moderate pace, though somewhat more slowly than the committee had expected.”
Fed officials lowered their forecasts for growth and employment this year and next, projecting the economy will expand 2.7 per cent to 2.9 per cent this year, down from forecasts ranging from 3.1 per cent to 3.3 per cent in April.
A spate of weaker than expected economic data has underscored fears that the recovery is faltering, though, and raised worries about how the economy will fare without more support from the government.
US central bankers said inflation, excluding food and energy, will be somewhat higher than previously forecast.
In a Twitter post yesterday morning, Bill Gross, who runs the world’s biggest bond fund at Pacific Investment Management in California, said the Fed at its Jackson Hole meeting this August “will likely hint” at a third round of quantitative easing in an effort to limit borrowing costs through interest-rate caps. – (Bloomberg/ Reuters)
