After Market: Stocks Stumble After Hawkish Fed Cuts Stimulus
The Federal Reserve did what the market expected on Wednesday, and that may have been the problem. It continued to taper -- that is, trim the amount of stimulus it injects into the economy each month. The Fed also dropped a specific target for the unemployment rate, though it vowed to keep short-term interest rates near zero for a considerable period of time. But investors worried about some of the nuances in Janet Yellen's comments.
The market was flat when the Fed statement was released, but immediately turned lower. The Dow Jones industrial average (^DJI) lost 114 points on the day, the Nasdaq composite (^IXIC) lost 25 and Standard & Poor's 500 index (^GPSC) fell 11 points.
KB Home (KBH) took home a 6 percent increase after reporting a profit versus a loss a year ago, but other homebuilders gave back their gains following the Fed news. And despite Wednesday's gain, KB shares are still about 10 percent lower than were a year ago.
Financial stocks were generally higher following the Fed statement.
And FedEx (FDX) stock was flat, which has to be considered a win following a disappointing earnings report. The company said results were "significantly affected by severe winter weather." %VIRTUAL-WSSCourseInline-1049%A lot of companies have used that excuse recently, but investors apparently believe FedEx.
Elsewhere, Starbucks (SBUX) gained 2 percent. Its CEO told CNBC that it has no plan to raise prices, despite the sharp rise in wholesale coffee prices.
Hewlett-Packard (HPQ) rose another 3.5 percent, on top of Tuesday's big gain. And another IPO debuted with a blowout day. Paylocity (PCTY), which makes cloud-based software, soared 53 percent above its $17 a share IPO price.
First Solar (FSLR) jumped 20 percent after announcing a new pact with General Electric (GE) to develop a photovoltaic power plant. But Solar City (SCTY) fell 5.5 percent after posting earnings that fell shy of expectations.
Some of the biggest names in tech gave back some of their recent gains. Google (GOOG), Facebook (FB) and Amazon (AMZN) all lost about 1 percent.
Finally, Prothena (PRTA) was a standout gainer, soaring 26 percent after presenting some positive data on treating an abnormal build-up in protein.
What to Watch Thursday:
The Labor Department reports weekly claims for unemployment benefits at 8:30 a.m. Eastern time.
At 10 a.m., the Federal Reserve Bank of Philadelphia releases its March survey of manufacturing activity in the Mid-Atlantic region; the National Association of Realtors reports February existing home sales; Freddie Mac releases weekly mortgage rates; and the Conference Board releases leading indicators for February.
These major companies are scheduled to release quarterly financial statements:
-Produced by Drew Trachtenberg.
