Fears that the United States Federal Reserve will begin paring its program to stimulate the American economy sooner than expected spooked markets on Thursday, adding uncertainty to trading.
In afternoon trading, the Standard Poor’s 500-stock index was flat, the Dow Jones industrial average was off 0.1 percent and the Nasdaq composite gained 0.1 percent lower.
The Fed’s announcement on Wednesday that it would maintain its $85 billion monthly bond purchasing program was widely expected, and cheered, by investors. But the bank’s economic outlook was rosier than anticipated and could indicate that it would begin to reduce those purchases — a process known as tapering — soon.
“The reason the markets are cautious today is because officials threw a spanner in the works when they hinted that tapering could occur earlier than many investors thought,” said Shavaz Dhalla, a financial trader with Spreadex. “Policy officials argued that advancements in household spending as well as investments were encouraging despite a struggling housing market.”
The Fed no longer expressed concern, as it did in September, that higher mortgage rates could hold back hiring and economic growth. And its statement made no reference to the 16-day government shutdown, which economists say slowed growth this quarter. Some analysts said that suggested tapering could begin early next year.
In Europe, France’s CAC 40 ended the session up 0.48 percent, while the DAX in Germany rose 0.14 percent. Britain’s FTSE index of leading shares pulled back 0.67 percent.
Markets in Asia retreated. Japan’s Nikkei 225 lost 1.2 percent, to close at 14,327.94 points, and Hong Kong’s Hang Seng was off 0.4 percent, at 26,206.37. China’s Shanghai Composite shed 0.9 percent, to 2,141.61, and Seoul’s Kospi lost 1.4 percent, to 2,030.09. Benchmarks in Jakarta, Singapore, Taiwan and Malaysia also fell.
In earnings reports, Sony said on Thursday that it had swung to a loss in its summer quarter as strong sales of smartphones were not enough to overcome a dismal performance by the company’s Hollywood arm. Sony shares traded in the United States fell 11 percent.
Time Warner Cable reported that it lost 306,000 of its 11.7 million TV subscribers, the steepest quarterly loss of television subscribers in its history, which it attributed at least in part to the monthlong battle it had with the CBS Corporation in August. The shares, though, rose 3.2 percent.
Benchmark light, sweet crude oil fell, dropping 49 cents, to $96.28 a barrel. Energy prices typically drop when investors are worried that the world economy might slow.
The Fed’s cheap money policy has underpinned stock markets worldwide for several years and has been credited with helping the United States economy, the world’s largest, to recover. If the United States starts to falter again, it will have an effect on the recovery of economies around the world.
The euro fell 1 percent, to $1.3593.
Article source: http://www.nytimes.com/2013/11/01/business/daily-stock-market-activity.html?partner=rss&emc=rss
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