Another mixed batch of economic reports underscored investors' concerns over the timing of the Federal Reserve's inevitable curtailment of its monthly purchases of $85 billion in long-term securities. The Fed has kept the short-term federal funds rate in a range of zero to 0.25% since late 2008. The central bank's bond buying is meant to keep the squeeze on the rate curve, by holding long-term rates down.
The market had been anticipating a slowing of the Federal Reserve's balance sheet expansion, sending the yield on 10-year U.S. Treasury bonds up by 44 basis points from the end of April to Tuesday, when the market yield was 2.14%. Investors on Wednesday pushed the yield on the 10-year down to roughly 2.11%.
The broad indices all ended with declines of over 1%. The KBW Bank Index (I:BKX) was down 2% to close at 59.95, with all 24 index components showing declines.Big banks with stocks showing 2% declines included Goldman Sachs (GS), with shares closing at $158.30; Citigroup (C), closing at $50.03; Bank of America (BAC - Get Report), at $13.09; Capital One (COF), at $60.19; JPMorgan Chase (JPM - Get Report), at $53.03; and State Street (STT), which closed at $64.88.