Market report

Oil-hit stocks end 2nd day down

Trader Peter Tuchman works on the floor of the New York Stock Exchange Wednesday, Jan. 28, 2015. U.S. stocks moved higher in early trading Wednesday after very strong earnings from Apple and Boeing.
Trader Peter Tuchman works on the floor of the New York Stock Exchange Wednesday, Jan. 28, 2015. U.S. stocks moved higher in early trading Wednesday after very strong earnings from Apple and Boeing.

The Federal Reserve's latest take on the U.S. economy got investors in a selling mood Wednesday, as stocks fell sharply for the second straight day.

The stock market also took a hit when benchmark U.S. oil sank to its lowest level in nearly six years, hurting prospects for energy companies.

The Dow Jones industrial average dropped 195.84 points, or 1.1 percent, to close at 17,191.37. The Standard & Poor's 500 index lost 27.39 points, or 1.4 percent, to 2,002.16.

The Nasdaq composite dropped 43.50 points, or 0.9 percent, to 4,637.99.

The central bank issued a statement Wednesday making clear that it would remain "patient" in raising interest rates from near zero, which was expected. But the Fed also strengthened its assessment of the U.S. economy, noting it is expanding at a solid pace and generating strong job growth. It was a signal the Fed is moving closer to raising rates, even if it's not contemplating an imminent increase. When interest rates remain low, they tend to make stocks more attractive in comparison with bonds.

"The market is, on one hand, happy the Fed is saying things look solid, but it means at some point we will get that first rate hike," said Quincy Krosby, market strategist for Prudential Financial.

The Energy Department reported that U.S. oil inventories rose to their highest levels ever recorded. Those high supplies drove crude prices to the lowest level since March 2009. Benchmark U.S. crude fell $1.78 to close at $44.45 a barrel in New York. As recently as June, it traded above $100.

Inflation has stayed low partly because of the plunge in energy prices and a steadily rising dollar. The Fed noted it anticipates inflation will decline further before starting to rise gradually.

Prices for the benchmark 10-year Treasury jumped after the Fed statement came out, knocking the yield to 1.70 percent, the lowest level this year. It edged back up to 1.72 percent late in day, compared with 1.82 percent late Tuesday. The yield on the 30-year bond, meanwhile, touched a record low of 2.27 percent.

"The Fed has a much more beneficial view on drop in oil than the stock market does," said John Canally, chief economic strategist at LPL Financial.

The market had been in a wait-and-see mode in advance of the Fed statement, drifting between small gains and losses for much of the day. Falling oil prices dragged the energy sector lower, while strong earnings from Apple helped lift tech stocks.

The market initially perked up after the Fed issued its statement at 1 p.m. But the gains were short-lived, and by late afternoon three major indexes slumped, extending their losses for the year. The Dow is now 4.8 percent below its all-time high of 18,053.71 on Dec. 26. The S&P 500 index is down 4.2 percent from its high of 2,090.57 on Dec. 29.

The 10 sectors in the index fell Wednesday, with energy stocks falling the most.

Among the biggest decliners were several oil and gas exploration companies, as well as drilling services and equipment providers.

Nabors Industries led declines. It slid $1.39, or 11.7 percent, to $10.49. Denbury Resources lost 67 cents, or 9.4 percent, to $6.47. Hess Corp. tumbled $5.59, or 7.8 percent, to $66.02.

Information for this article was contributed by Joe McDonald and Matthew Craft of The Associated Press.

Business on 01/29/2015

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