Stocks dropped after?Charles Plosser, president of the Fed's Philadelphia branch, told an audience Tuesday that the Fed's effort to support the economy would likely fall short of its goals.
Philadelphia Federal Reserve President Charles Plosser speaks at an Economics21 event in New York in this March 2011 file photo. Plosser said he doubted the bank's effort to boost economic growth would work, sending stocks tumbling Tuesday.
Brendan McDermid/Reuters/File
EnlargeA quiet day on?Wall?Street?turned into the worst sell-off in three months after a Federal Reserve official said he doubted the bank's effort to boost economic growth would work.
Skip to next paragraph' +
google_ads[0].line2 + '
' +
google_ads[0].line3 + '
Subscribe Today to the Monitor
Charles Plosser, president of the Fed's Philadelphia branch, told an audience Tuesday that the Fed's effort to support the economy would likely fall short of its goals. And if the Fed looks ineffective, it could undermine future Fed action.
The speech probably startled some investors who had faith in the Fed's latest plan, said Jack Ablin, chief investment officer Harris Private Bank. The plan includes buying $40 billion in mortgage bonds each month until the economy improves.
"So many investors have bought into the illusion," he said. "And it was like Plosser pulled up the curtain on the Wizard of Oz."
The Standard & Poor's 500 index lost 15.30 points, its fourth straight decline, to close at 1,441.59. The 1.05 percent drop was the worst for the S&P since June 25.
The Dow Jones industrial average lost 101.37 points to close at 13,457.55. Caterpillar tugged the Dow down, losing 4 percent. The world's largest maker of bulldozers and other heavy equipment said late Monday that slower economic growth around the world dampened its earnings forecast. Its stock sank $3.86 to $87.01.
A batch of encouraging economic reports gave the stock market a nudge in morning trading. House prices rose in major cities for a third straight month, and a gauge of consumer confidence came in surprisingly high.
More surprising than those two economic reports was the Richmond Federal Reserve's strong reading on regional manufacturing, a recent trouble spot, said Phil Orlando, chief equity strategist at Federated Investors.
"Look at that. There were three data points on the economy and we crushed them," said Phil Orlando, chief equity strategist at Federated Investors.
But sagging profits could drag on the stock market in the coming weeks, Orlando said. Caterpillar joined a growing collection of companies have lowered their earnings forecasts. FedEx, a bellwether of world trade, said that shipping has sunk to recession-like levels. Railroad giant Norfolk Southern has also warned that falling shipments and sinking coal prices will likely drag down its earnings.
Wall?Street?analysts now estimate that corporate profits will sink this quarter from a year earlier. That would be the first such drop in three years.
The Nasdaq composite index dropped 43.05 points to 3,117.73. Google's stock touched an all-time high in early trading, clearing $764, but closed the trading day at $749.16.
Apple, the largest public company in the world, lost $17.25, or 2.5 percent, to close at $673.54. It has lost more than $26 in two days. Apple is the biggest component in the S&P but is not included in the Dow, helping explain why the S&P suffered a greater percentage decline than the Dow's 0.8 percent.
The closely watched Standard & Poor's/Case Shiller index of national house prices increased 1.2 percent in July compared with the same month in 2011. Prices rose from the previous month in all 20 major cities tracked by the report for the third month in a row.
The Conference Board said its gauge of consumer confidence shot to a seven-month high in September, trumping forecasts by a large margin. People surveyed said they were more optimistic about the job market.
The Federal Reserve's manufacturing index, which surveys companies in the central Atlantic region, increased after shrinking for three months as businesses turned more optimistic. Companies said they anticipate more orders and shipments even as employment dips. The index turned positive in September after a negative reading in August.
All three major stock indexes have surged or more this month, buoyed by a new plan from the Federal Reserve to support the U.S. economy. Both the Dow and the S&P 500, the benchmark for most stock funds, have gained more than 3 percent.
Treasury prices rose as traders shifted money into safe assets. The 10-year Treasury yield, the benchmark for mortgages and other loans, dipped to 1.67 percent, down from 1.71 percent late Monday.
Source: http://rss.csmonitor.com/~r/feeds/csm/~3/8O67J15PMlA/Dow-plummets-100-points-in-stock-sell-off
nicole richie lyme disease symptoms esperanza spalding jessica sanchez robert kennedy cardinals san diego weather
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.