FOX Business: Capitalism Lives Here
After initially rallying on dovish commentary from Fed chief Bernanke earlier in the session, the markets skidded far into the red in late trading.
Continue Reading Below
As of 3:49 p.m. ET, the Dow Jones Industrial Average fell 103 points, or 0.67%, to 15285, the S&P 500 declined 16.8 points, or 1%, to 1652 and the Nasdaq Composite dipped 47.1 points, or 1.3%, to 3455.
It's all about the Fed.
The markets have surged this year -- with the Dow closing at record highs 22 times -- partially as a result of the central bank's massive quantitative easing program. Wall Street has been keeping close tabs on when the Fed may begin tapering the $85 billion a month in bonds it is buying.
Fed Chairman Ben Bernanke told Congress Wednesday that the central bank's aggressive monetary policy is helping the economy, and withdrawing too early could damage the financial system and knock the economic recovery off course.
"From Bernanke’s standpoint, sufficient progress has not yet been made in order to slow the pace of asset purchases," Dan Greenhaus, chief global strategist at BTIG wrote in an email.
The economy has shown considerably signs of improvement of late, with the housing market rebounding and the labor market still adding jobs -- but the recovery has still been choppy.
Meanwhile, members of the Federal Reserve’s policy-setting committee saw the U.S. economy as expanding at a "moderate" pace in the first quarter and remained generally steadfast on the need to continue on with the central bank’s aggressive easing program, according to minutes released Wednesday. However, members did discuss the size and duration of quantitative easing.
New York Fed President William Dudley also made remarks Tuesday that were seen as dovish by analysts.
"In terms of our asset purchase program, I believe we should be prepared to adjust the total amount of purchases to that needed to deliver a substantial improvement in the labor market outlook in the context of price stability," he said in a speech in New York. "Because the outlook is uncertain, I cannot be sure which way—up or down—the next change will be."
Also on the economic front, U.S. existing home sales rose 0.6% in April from March to a 4.97-million unit annualized rate, slightly missing estimates of a 4.99-million unit rate and the highest level since November 2009, according to the National Association of Realtors.
In corporate news, Target (NYSE:TGT) revealed adjusted first-quarter profits and revenues that were shy of expectations. Lowe's (NYSE:LOW) posted quarterly results that missed estimates on the top and bottom lines. Pfizer (NYSE:PFE) said it will split off the remainder of Zoetis (NYSE:ZTS), which was its animal-health unit.
Gold prices rallied $15.40, or 1.1%, to $1,393 a troy ounce. Oil dipped 55 cents, or 0.57%, to $96.16 a barrel. Wholesale New York Harbor gasoline slumped 0.61% to $2.828 a gallon.
The English FTSE 100 fell 0.29% to 2814, the English FTSE 100 dipped 0.04% to 6801 and the German DAX ticked lower by 0.09% to 8465.
In Asia, the Japanese Nikkei 225 surged 1.6% to 15627 and the Chinese Hang Seng tilted lower by 0.45% to 23261.