Stocks fall as Fed says its help to go on
NEW YORK - The stock market retreated from all-time highs Wednesday after the Federal Reserve said the U.S. economy still needed help from its stimulus program.
In its latest policy statement, the nation's central bank said it would continue buying $85 billion in bonds every month and keep its benchmark short-term interest rate near zero. The bond purchases are designed to keep borrowing costs low to encourage hiring and investment.
The Fed said it would "await more evidence" that the economy was improving before starting to pull back its stimulus program.
The soonest the Fed could revisit its bond-buying program will be at its mid-December meeting. However, Ben Bernanke's term as Fed chairman ends in February, and his successor, Janet Yellen, has yet to be confirmed by the Senate. It is seen as unlikely that Bernanke would take on such a large project such as pulling back on the bond-buying program when he only has months left in the position.
On Wednesday, the Dow Jones industrial average lost 61.59 points, or 0.39 percent, to 15,618.76. The Standard & Poor's 500 index fell 8.64 points, or 0.49 percent, to 1,763.31. The Dow and S&P 500 closed at record highs Tuesday.
The Nasdaq composite fell 21.72 points, or 0.55 percent, to 3,930.62.
Bond prices also fell after the Fed's announcement. The yield on the benchmark U.S. 10-year Treasury note rose to 2.54 percent from 2.50 percent the day before.
Stocks of home construction companies fell after the Fed said in its policy statement that "the recovery in the housing sector slowed somewhat in recent months."
KB Home fell 47 cents, or 3 percent, to $17.49. Luxury homebuilder Toll Bros. fell 56 cents, or 2 percent, to $33.56, and PulteGroup fell 21 cents, or 1 percent, to $18.00.
General Motors rose $1.17, or 3 percent, to $37.23. After taking out one-time effects, the nation's largest automaker earned $1.7 billion, or 96 cents per share, beating analysts' expectations of 94 cents per share.
Western Union plunged $2.39, or 12 percent, to $16.85. The money transfer company said late Wednesday that it may not see any profit growth in 2014 due to increasing regulation and compliance costs.
Facebook rose in after-hours trading after the company reported higher income than analysts were expecting. The social media network said it earned an adjusted profit of 25 cents per share for the third quarter, six cents better than what analysts were expecting. Revenue jumped 60 percent to $2.02 billion.