Stocks Fall After Fed; ECB Up Next
Stocks closed lower in a see-saw session Wednesday after the Federal Reserve maintained its current monetary policy but left the door open for additional stimulus should conditions warrant. The Fed said it will continue to hold interest rates low through at least 2014 and continue Operation Twist through the end of the year.
The Dow Jones Industrial Average, S&P 500and Nasdaqall ended in the red. The Dow fell 32.55 points, or 0.25 percent, to close at 12967.13. That was the first close below 13,000 since last Thursday. The S&P 500 lost 4 points, or 0.29 percent, to close at 1375.32, while the Nasdaq lost 19.31 points, or 0.66 percent, to close at 2920.21.
Travelers led the blue-chip gainers, while Hewlett-Packard fell sharply.
Energy stocks led the S&P sector gainers, while industrials and utilities slumped.
The CBOE Volatility Index, widely considered the best gauge of fear in the market, fell to slightly below 19.
Although the Federal Reserve disappointed the marketby not extending its guidance for low rates further into the future, the central bank said in its statement, "The Committee will closely monitor incoming information on economic and financial developments and will provide additional accommodation as needed."
Referring to the "will provide additional accommodation" language in the statement, Jeff Applegate, Morgan Stanley Smith Barney’s chief investment officer, told CNBC, “I think this paves the way for the Fed to move in the next month or in September.”
Attention now turns to Europe where the European Central Bank and Bank of England are holding policy meetings tomorrow. Investors will be looking for concrete actions that the ECB is prepared to act to protect the euro zone from collapse. (Read More: What to Expect From Thursday’s ECB Meeting).
If the Fed decision weren't enough to keep investors occupied today, a software glitch caused volatile trading at the open for about 140 stocks, including nine Dow components.
The individual stock volatility was a result of technology problem at Knight Capital Group . Knight told CNBCthat a technology issue occurred in the company’s market-making unit related to the routing of shares of approximately 150 stocks to the NYSE. Knight notified its market-making clients this morning to route listed orders away.
The New York Stock Exchange said it will cancel trades in six stocks affected by the earlier activity, including Wizzard Software , Quicksilver Resources , E House , American Reprographics and China Cord Blood .
Today's economic data was generally mixed. Automatic Data Processing said July private sector employment increased by 163,000, but the Institute for Supply Management’s manufacturing index came in at 49.8 percent for July, an indication of continued contraction. June construction spending, meanwhile, rose 0.4 percent after a May increase of 0.9 percent.
Elsewhere, the Mortgage Bankers Associationsaid its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, rose 0.2 percent in the week ended July 27.
Chrysler Group reported that July U.S. auto salesincreased 13 percent, the best July sales in five years. Ford Motor said sales fell 4 percent during the month, while General Motors saw a 6.4 percent decline. Both blamed lower fleet sales. (Read More: July Auto Sales Provide Cautious Optimism).
Crude oilinventories fellby 6.5 million barrels last week versus a forecast for a 0.7 million barrel drawdown, according to the Department of Energy.
Turning to earnings news, Comcast posted a higher-than-expected quarterly profit as it benefited from customer additions for its Internet and phone services. Revenue rose 6 percent to $15.2 billion. Comcast is the majority owner of NBC Universal, the parent company of CNBC and CNBC.com.
Time Warner reported lower net income on declines in its film, TV entertainment and publishing units. Revenue at the media giant fell 4 percent.
MasterCard posted better than expected second-quarter earnings but revenues came in weaker than anticipated.
Home and auto insurer Allstate posted better-than-expected quarterly earnings on a lower disaster impact.
Revenue rose 14.6 percent at motorcycle maker Harley Davidson , but missed expectations.
Costco reported net sales of $7.25 billion on a 7 percent jump in same-store sales.
Second-quarter earnings at Avon plunged 70 percent on a 9 percent fall in revenue. Energizer's revenues for the third quarter came in weaker than expected.
Botox maker Allergan reported better than expected second-quarter earnings as revenue rose 4.8 percent.
General Motors, Kellogg, Kraft Foods and LinkedIn report earnings tomorrow.
Coming Up This Week:
THURSDAY: Jobless claims, factory orders, chain-store sales; Earnings from GM, Sony, Clorox, Teva Pharmaceuticals, Time Warner Cable, AIG, Kraft, Activision Blizzard, LinkedIn, Sunoco, Opentable, Zipcar
FRIDAY: Employment situation, ISM non-mfg index; Earnings from P&G, Toyota, Beazer Homes, NYSE Euronext, Berkshire Hathaway
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