The announcement caught the market off guard, but the decision signals a strong U.S. economy.
Wall Street finished trading today with modest losses after the Federal Reserve announced it would discontinue stimulative monthly bond purchases, expressing confidence in the overall economy.
The initial statement sent some indexes tumbling, with the S&P 500 dropping 0.8 percent before recovering later in the day, according to Reuters. Some struggles with Facebook’s stock also caused downward pressure on the Nasdaq, but that fund has been bolstered by a strong energy and financial sector.
The Fed’s bond-buying program had injected $85 billion each month into the market, encouraging investors to buy, but after a two-day meeting the Fed concluded that it was time to end the quantitative easing effort. It also no longer referred to the U.S. labor market as having “significant” slack, which suggests confidence in the underlying strength of the U.S. economy.
The confidence caught the market a little off guard, according to the report, and although it initially caused weakness in stock prices, the underlying message of confidence it communicated caused those stocks to bounce back.
Overall, the Dow Jones industrial average shed 0.18 percent, a drop of 31.44 points, while the S&P 500 lost 2.75 points (0.14 percent) to bring it to 1,982.3 and the Nasdaq shed 15.07 points, a decline of 0.33 percent to 4,549.23.
Key companies showed some disappointing returns. DuPont lost 1.7 percent of its value after decided to keep its businesses together rather than strategically split up. Facebook drooped 6.1 percent after the announcement that it would boost spending in 2015 despite an expected slowdown in revenue this quarter.
However, some powerful players had much stronger results, with Visa rising 3.6 percent thanks its reporting of fourth-quarter results and a planned stock buyback program in the area of $5 billion.
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