NEW YORK - The stock market retreated from all-time highs Wednesday after the Federal Reserve said the U.S. economy still needed help from its stimulus program.
The Dow Jones industrial average fell 61.59 points, or 0.4 percent, to 15,618.76. The Standard & Poor’s 500 index fell 8.64 points, or 0.5 percent, to 1,763.31. The Dow and S&P 500 closed at record highs Tuesday.
The Nasdaq composite fell 21.72 points, or 0.6 percent, to 3,930.62.
In its latest policy statement, the nation’s central bank said it will continue buying $85 billion in bonds every month and keep its benchmark short term interest rate near zero. The bond purchases are designed to keep borrowing costs low to encourage hiring and investment.
The Fed said it would “await more evidence” that the economy was improving before starting to pull back its stimulus program.
The Fed’s announcement was mostly expected by investors. Since the Fed’s last meeting in September, the economy suffered a blow because of the 16-day partial shutdown of the U.S. government and the near-breach of the nation’s borrowing limit.
As a result, investors thought it unlikely the Fed would make any changes to its stimulus program until there was more evidence that the U.S. economy could grow without the central bank’s help.
The soonest the Fed could revisit its bond-buying program will be at its mid-December meeting. However, Ben Bernanke’s term as Fed chairman ends in February, and his successor, Janet Yellen, has yet to be confirmed by the Senate. It is seen as unlikely Bernanke would take on such a large project like pulling back on the bond-buying program when he has only months left in the position.
“We’re looking at March of next year at the earliest” before the Fed will start to pull back, said Dean Junkans, chief investment officer for Wells Fargo Private Bank.
Bond prices also fell after the Fed’s announcement. The yield on the benchmark U.S. 10-year Treasury note rose to 2.54 percent from 2.50 percent the day before.
Stocks of home construction companies fell after the Fed said in its policy statement that “the recovery in the housing sector slowed somewhat in recent months.” Last month, the Fed said housing “has been strengthening.”
KB Home fell 47 cents, or 3 percent, to $17.49. Luxury home builder Toll Brothers fell 56 cents, or 2 percent, to $33.56, and PulteGroup fell 21 cents, or 1 percent, to $18.00.
Investors also had another dose of quarterly earnings to work through.
General Motors rose $1.17, or 3 percent, to $37.23. After taking out one-time effects, the nation’s largest automaker earned $1.7 billion, or 96 cents per share, beating analysts’ expectations of 94 cents per share.
Western Union fell $2.39, or 12 percent, to $16.85. The money-transfer company said late Wednesday that it may not see any profit growth in 2014 because of increasing regulation and compliance costs.
Facebook soared in after hours trading after the company reported higher income than analysts were expecting. The social media network said it earned an adjusted profit of 25 cents per share for the third quarter, 6 cents better than what analysts were expecting. Revenue jumped 60 percent to $2.02 billion.
Business, Pages 26 on 10/31/2013