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U.S. stocks slid Wednesday after the Federal Reserve said economic growth
had paused.
The Fed announcement came after a government report released earlier in the
day showed the U.S. economy contracted during the fourth quarter of 2012.
Still, the fact that the Fed assured the market that it will keep its
bond-buying program in place indefinitely likely assured investors and
minimized the selling.
And while the GDP contraction is a "shock," it is also likely an
exaggeration of the economy's weakness, said Marc Chandler of Brown
Brothers Harriman. Wednesday's GDP report is the Commerce Department's
first estimate for the fourth quarter and it will be revised twice over the
next two months.
The Dow Jones industrial average, S&P 500 and Nasdaq ended the day down
between 0.3% and 0.4%.
Stocks remain near all-time highs. The Dow is less than 2% away from its
record high of 14,198.10 reached in October 2007, while the S&P 500 is less
than 5% away from its record high of 1,576.09, also reached in October
2007.
Meanwhile, prices on U.S. Treasuries increased slightly after the Fed
statement, with the 10-year yield moving back to 2%. The yield topped 2% on
Monday for the first time since last April.
Related: Fear & Greed index deep in extreme greed
On the corporate front, Research in Motion (RIMM) shares tumbled as the
company announced the long-awaited BlackBerry 10. RIM is hopeful that its
new operating system and devices will change its fortunes in the smartphone
market. The company also announced that it is changing its name to
BlackBerry, reflecting its big bet on new operating system.
Boeing (BA, Fortune 500), which has been dogged over the past few weeks by
problems with its now-grounded 787 Dreamliner fleet, topped fourth-quarter
earnings forecasts. The aircraft maker says it does not expect a
significant financial impact from the grounding of the 787s.
Oil producer Phillips 66 (PSX) shares rose after the company's beat
earnings expectations. Shares of Amazon (AMZN, Fortune 500) gained 5% after
the company delivered a 22% jump in fourth-quarter sales late Tuesday.
Shares of Facebook (FB) dropped about 4% in after hours trading. The social
media company beat analysts' estimates for its quarterly earnings and
revenues, but investors were dismayed by its slowing growth.
Qualcomm's (QCOM, Fortune 500) shares surged in after hours trading. The
company beat forecasts and raised its 2013 outlook.
Shares of Chesapeake Energy (CHK, Fortune 500) closed up 6% after the
natural-gas producer announced late Tuesday that embattled CEO Aubrey
McClendon will retire in April.
Meanwhile, payroll processor ADP said private employers added 192,000 jobs
in January, higher than the 175,000 jobs that analysts were expecting. The
ADP report is the first of three this week to provide a snapshot of
nation's job market.
European markets closed in the red. Asian markets finished with solid
gains, led by Japan's Nikkei, which gained 2.3% to close above 11,000.
The dollar declined versus the euro and the pound, but gained ground versus
the Japanese yen.
Oil prices edged higher, while gold prices dipped. (Embedded image moved to
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MARKET WATCH 31 JAN 2013
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