Stocks slump after weak earnings; Fed cuts stimulus
NEW YORK — Stock investors had plenty to dislike on Wednesday.
Disappointing earnings from big U.S. companies, ongoing jitters in emerging markets and more cuts to the Federal Reserve’s economic stimulus combined to push stocks lower for the fourth day out of the last five.
Boeing slumped after the plane maker said its 2014 revenue and profit would fall short of analysts’ expectations as its defense business slows and it delivers more of its 787 planes, which are less profitable. AT&T, the largest U.S. telecommunications company, fell after its outlook for the year disappointed i nvestors .
Currencies including the Turkish lira and the South African rand fell against the dollar despite efforts by central banks in those countries to stem the declines by raising interest rates. Investors say those tighter credit policies, which can restrict lending, come with risks.
“If the central banks out there continue to hike interest rates, they are going to destroy economic activity,” said Peter Cardillo, chief market economist at Rockwell Global Capital. “That will impact the global economy as well.” The Standard & Poor’s 500 index fell 18.30 points, or 1 percent, to 1,774.20. The Dow Jones industrial average fell 189.77 points, or 1.2 percent, to 15,738.79. The Nasdaq composite dropped 46.53 points, or 1.1 percent, to 4,051.43.
Stocks opened lower in response to the lackluster earnings news. The market added to its declines after the Fed’s announcement at 2 p.m. Eastern time. The Fed said it will lower its monthly bond purchases by $10 billion to $65 billion because of a strengthening U.S. economy.
The Fed is cutting back its bond purchases, which have held down long-term interest rates, even though the prospect of reduced stimulus has rattled global markets. The move was largely anticipated by analysts and investors.
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