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[h=1]Dow drops 234 points as Fed fans global growth fears[/h]
Published: Sept 18, 2015 10:32 a.m. ET
[h=2]Main indexes erose weekly gains
[/h]
Getty Images
Volatility is coming back.
By
[h=3]AnoraMahmudova[/h] Reporter
[h=3]BarbaraKollmeyer[/h] Markets reporter
U.S. stocks fell sharply in early trade Friday as fears about global growth resurfaced in the wake of the Federal Reserves decision to leave its key borrowing rate unchanged.
The central bank cited concerns about global growth and lack of inflation growth in its Thursday decision.
Fridays steep losses eroded weekly gains, putting the main indexes on track to end the week roughly where they started. Trading volume was elevated on Friday due to quadruple witching, which means the expiration of various stock-index futures, stock-index options, stock options and single-stock futures.
But the main focus was the Fed.
By not raising the rates, the Fed is now fanning global growth fears, said Steven Wieting, global chief investment strategist, at Citi Private Bank.
The key for future market action depends largely on whether or not the Fed had any good cause to worry about international developments, Wieting said.
These 5 charts show why the Fed is fretting about emerging markets.
The S&P 500 SPX, -1.36% fell 21 points, or 1.1%, to 1,968, with losses across the board. Energy shares fell following a sharp drop in oil prices. Financials were also hit hard.
The Dow Jones Industrial Average DJIA, -1.25% dropped 238 points, or 1.4%, to 16,438, with nearly all 30 blue-chip companies trading lower. J.P.Morgan Chase & Co JPM, -2.55% and Goldman Sachs Group, Inc. GS, -2.85% were the top decliners, falling 2.6% and 2.4% respectively .
The Nasdaq Composite COMP, -1.18% declined 41 points, or 0.9% to 4,852.
Bond yields slid.
Fed Chairwoman Janet Yellen and her team held off on an interest-rate increase Thursday, citing global economic concerns, chiefly surrounding China. Investors had been debating for weeks, if not months, when the Fed would raise rates for the first time in nearly a decade. Some analysts say a rate increase could still come by Christmas, but others are pushing it even further out.
Michael ORourke, chief market strategist at JonesTrading, said the Feds window for tightening has probably been shut now. He said the central bank is paralyzed by fear of deflationary effects from a strengthening dollar and a potential rollover of the global economy.
Anyone expecting asset-price gains to be driven by monetary policy is missing the fact that there is no monetary policy. The Federal Reserve is a spectator on the sidelines, and it just forfeited its opportunity to uphold the illusion that it is in this game, wrote ORourke in The Closing Print.
In the days sole U.S. economic data, the Conference Boards leading economic index edged up 0.1% in August after a flat reading in July.
Opinion: Those 10% average yearly stock gains arent likely coming back soon
Global markets react to the Fed: The dollar was on track for a three-week low as it extended losses Friday. It dropped 0.8% against the Japanese yen USDJPY, -0.18% to ¥119.66, a move that sent the Nikkei 225 index NIK, -1.96% 2% lower for the session and down 1% for the week. Emerging markets generally saw gains across the board, though the Shanghai Composite Index SHCOMP, +0.38% rose only 0.4%. It finished down 3.2% for the week.
An array of stocks, such as banks and manufacturers, sold off across Europe, pushing the Stoxx Europe 600 index SXXP, -1.78% down 1.9%. Oil CLV5, -3.65% prices slid again, down 3.2% to $45.40 a barrel, while gold GCZ5, +1.80% remained a winner in the Feds aftermath, up 2% to $1,139.20 an ounce.
Read: Gold higher as analyst talks of perfect mini-storm for the precious metal
Stocks to watch: Shares of Freeport-McMoRan Inc. FCX, -10.58% skidded 8.3% after the company raised $1 billion through selling stocks and plans to raise another $1 billion.
Adobe Systems Inc. ADBE, +0.97% shares jumped 3.3% after the company reported sharply higher third-quarter profit and disclosed a leadership shake-up. Shares were higher even as the company missed expectations.
Medical-device maker Penumbra Inc. PEN, +33.80% soared 35% to $40.40 in its trading debut, after the company priced its initial public offering at $30 a share.
Dow drops 234 points as Fed fans global growth fears - MarketWatch
Published: Sept 18, 2015 10:32 a.m. ET
[h=2]Main indexes erose weekly gains
[/h]
Volatility is coming back.
By[h=3]AnoraMahmudova[/h] Reporter
[h=3]BarbaraKollmeyer[/h] Markets reporterU.S. stocks fell sharply in early trade Friday as fears about global growth resurfaced in the wake of the Federal Reserves decision to leave its key borrowing rate unchanged.
The central bank cited concerns about global growth and lack of inflation growth in its Thursday decision.
Fridays steep losses eroded weekly gains, putting the main indexes on track to end the week roughly where they started. Trading volume was elevated on Friday due to quadruple witching, which means the expiration of various stock-index futures, stock-index options, stock options and single-stock futures.
But the main focus was the Fed.
By not raising the rates, the Fed is now fanning global growth fears, said Steven Wieting, global chief investment strategist, at Citi Private Bank.
The key for future market action depends largely on whether or not the Fed had any good cause to worry about international developments, Wieting said.
These 5 charts show why the Fed is fretting about emerging markets.
The S&P 500 SPX, -1.36% fell 21 points, or 1.1%, to 1,968, with losses across the board. Energy shares fell following a sharp drop in oil prices. Financials were also hit hard.
The Dow Jones Industrial Average DJIA, -1.25% dropped 238 points, or 1.4%, to 16,438, with nearly all 30 blue-chip companies trading lower. J.P.Morgan Chase & Co JPM, -2.55% and Goldman Sachs Group, Inc. GS, -2.85% were the top decliners, falling 2.6% and 2.4% respectively .
The Nasdaq Composite COMP, -1.18% declined 41 points, or 0.9% to 4,852.
Bond yields slid.
Fed Chairwoman Janet Yellen and her team held off on an interest-rate increase Thursday, citing global economic concerns, chiefly surrounding China. Investors had been debating for weeks, if not months, when the Fed would raise rates for the first time in nearly a decade. Some analysts say a rate increase could still come by Christmas, but others are pushing it even further out.
Michael ORourke, chief market strategist at JonesTrading, said the Feds window for tightening has probably been shut now. He said the central bank is paralyzed by fear of deflationary effects from a strengthening dollar and a potential rollover of the global economy.
Anyone expecting asset-price gains to be driven by monetary policy is missing the fact that there is no monetary policy. The Federal Reserve is a spectator on the sidelines, and it just forfeited its opportunity to uphold the illusion that it is in this game, wrote ORourke in The Closing Print.
In the days sole U.S. economic data, the Conference Boards leading economic index edged up 0.1% in August after a flat reading in July.
Opinion: Those 10% average yearly stock gains arent likely coming back soon
Global markets react to the Fed: The dollar was on track for a three-week low as it extended losses Friday. It dropped 0.8% against the Japanese yen USDJPY, -0.18% to ¥119.66, a move that sent the Nikkei 225 index NIK, -1.96% 2% lower for the session and down 1% for the week. Emerging markets generally saw gains across the board, though the Shanghai Composite Index SHCOMP, +0.38% rose only 0.4%. It finished down 3.2% for the week.
An array of stocks, such as banks and manufacturers, sold off across Europe, pushing the Stoxx Europe 600 index SXXP, -1.78% down 1.9%. Oil CLV5, -3.65% prices slid again, down 3.2% to $45.40 a barrel, while gold GCZ5, +1.80% remained a winner in the Feds aftermath, up 2% to $1,139.20 an ounce.
Read: Gold higher as analyst talks of perfect mini-storm for the precious metal
Stocks to watch: Shares of Freeport-McMoRan Inc. FCX, -10.58% skidded 8.3% after the company raised $1 billion through selling stocks and plans to raise another $1 billion.
Adobe Systems Inc. ADBE, +0.97% shares jumped 3.3% after the company reported sharply higher third-quarter profit and disclosed a leadership shake-up. Shares were higher even as the company missed expectations.
Medical-device maker Penumbra Inc. PEN, +33.80% soared 35% to $40.40 in its trading debut, after the company priced its initial public offering at $30 a share.
Dow drops 234 points as Fed fans global growth fears - MarketWatch
