This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Stocks Drop Following Fed Doubts About Stimulus

By MATTHEW CRAFT

NEW YORK (AP) â¿¿ The stock market posted its biggest loss this year on news that Federal Reserve officials suggested the central bank scale back its effort to keep borrowing costs low.

Minutes from the Fed's January meeting seemed to catch investors by surprise when they were released at 2 p.m. EST. Several Fed policymakers worried that the bank's program of buying $85 billion of bonds each month could eventually unsettle financial markets or cause the bank to take losses. Even so, most of the Fed officials thought the economy faced fewer risks than in December.

Judging by the market's reaction, the Fed appears to be closer to ending its support for the economy than traders had expected, said Dan Greenhaus, chief global strategist at the brokerage BTIG. "We're at a point now where we're discussing how we're going to end this, not whether it's going to end," he said.

The S&P 500 index sank 18.99 points to 1,511.95, a loss off 1.2 percent. That's the biggest one-day drop since Nov. 14, 2012.

By buying bonds, the Fed drives up their prices and lowers interest rates, which have stayed at record lows. That keeps costs low for mortgages and other types of loans.

The major indexes drifted sideways in morning trading then turned lower in the early afternoon after Caterpillar reported weaker sales of its heavy trucks and mining equipment. Stocks fell further after traders had time to digest the Fed minutes. The S&P 500 lost 11 points in the last hour and a half of trading.

The Dow Jones industrial average fell 108 points, or less than 1 percent, to close at 13,927. Merck helped curb the Dow's fall, rising 1 percent, on news that it teamed up with a Korean drugmaker to create drugs.

The Nasdaq composite fell 49 points, or 1.5 percent, to 3,164.

1 of 3

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,960.57 -123.23 -0.72%
S&P 500 1,978.34 -9.64 -0.48%
NASDAQ 4,449.5640 -22.5440 -0.50%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs