Stocks End at Lows: S&P Logs Worst Day of 2013, Dow Below 14,000; Vix Soars 18%
By: JeeYeon Park CNBC.com Writer
Stocks ended near session lows Wednesday, with
the S&P 500 and Nasdaq down more than 1 percent each, following the
Federal Reserve's meeting minutes and as investors paused a day after
all three major averages closed at fresh multi-year highs.
"The selloff started after the Fed minutes–the minutes signaled that the Fed may not continue its bond-buying program down the road," said Keith Bliss, senior vice president at Cuttone & Co. "People have been looking for excuses to sell, but we're going to need a few more days to confirm if this is an actual pullback."
The Dow Jones Industrial Average slumped 108.13 points, or 0.77 percent, to close at 13,927.54, dragged by Bank of America and Alcoa.
The S&P 500 declined 18.99 points, or 1.24 percent, to finish at 1,511.95. The Nasdaq fell 49.19 points, or 1.53 percent, to end at 3,164.41.
The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, jumped above 14.
Minutes from the Fed's latest meeting showed that policymakers remain divided on the timing and amount of asset purchases, with some members saying that the bond buying program may need to end prior to the achievement of the central bank's previously announced goal of improvement in employment.
In January, policymakers voted to keep its QE3 policy, at a $85 billion monthly pace, while committing to hold interest rates near zero until unemployment reaches 6.5 percent.
"If the economic numbers continue to be good or OK, [the Fed] will try to phase out this asset purchase plan, so I don't think they're going to continue to buy $85 billion a month all the way through December and sometime in 2014, we might see our first rate hike," said David Kelly, chief global strategist at JPMorgan Funds. "[But for now,] this is pretty positive for the equity market—...the Fed feels good about the economy and is committed to keeping rates low."
In addition, traders pointed to rumors that some hedge funds had been forced to sell their positions across several commodities, putting pressure on materials and energy.
So far, the Dow and S&P 500 have gained an impressive 7 percent since the beginning of the year. The S&P 500 is on pace for its eight-straight weekly gain. The Dow within 1 percent of its all-time closing high of 14,164.53 hit on October 9, 2007.
"The selloff started after the Fed minutes–the minutes signaled that the Fed may not continue its bond-buying program down the road," said Keith Bliss, senior vice president at Cuttone & Co. "People have been looking for excuses to sell, but we're going to need a few more days to confirm if this is an actual pullback."
The Dow Jones Industrial Average slumped 108.13 points, or 0.77 percent, to close at 13,927.54, dragged by Bank of America and Alcoa.
The S&P 500 declined 18.99 points, or 1.24 percent, to finish at 1,511.95. The Nasdaq fell 49.19 points, or 1.53 percent, to end at 3,164.41.
The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, jumped above 14.
Minutes from the Fed's latest meeting showed that policymakers remain divided on the timing and amount of asset purchases, with some members saying that the bond buying program may need to end prior to the achievement of the central bank's previously announced goal of improvement in employment.
In January, policymakers voted to keep its QE3 policy, at a $85 billion monthly pace, while committing to hold interest rates near zero until unemployment reaches 6.5 percent.
"If the economic numbers continue to be good or OK, [the Fed] will try to phase out this asset purchase plan, so I don't think they're going to continue to buy $85 billion a month all the way through December and sometime in 2014, we might see our first rate hike," said David Kelly, chief global strategist at JPMorgan Funds. "[But for now,] this is pretty positive for the equity market—...the Fed feels good about the economy and is committed to keeping rates low."
In addition, traders pointed to rumors that some hedge funds had been forced to sell their positions across several commodities, putting pressure on materials and energy.
So far, the Dow and S&P 500 have gained an impressive 7 percent since the beginning of the year. The S&P 500 is on pace for its eight-straight weekly gain. The Dow within 1 percent of its all-time closing high of 14,164.53 hit on October 9, 2007.
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