Wall Street sank today after the Federal Reserve chairman Ben S. Bernanke signaled the recovery was strong enough for the central bank to consider backing off on some of its supports for the economy.
The S&P 500 Retailing Industry Group, which came within easy striking distance of its all-time high Tuesday, fell 1.3 percent, or 10.60 points, to 789.75, as the Dow Jones Industrial Average dropped 1.4 percent, or 206.04 points, to 15,112.19.
The day’s decliners included Avon Products Inc., down 3.3 percent to $22.67; J.C. Penney Co. Inc., 2.4 percent to $17.11; American Eagle Outfitters, 2.3 percent to $18.72; Macy’s Inc., 2 percent to $48.33, and Fifth & Pacific Cos. Inc., 2 percent to $22.19.
At a press conference, Bernanke noted that the Fed’s panel on monetary policy, which wrapped up a two-day meeting today, believes “the downside risks to the outlook for the economy and the labor market have diminished since the fall.”
Bernanke indicated that the economy was strong enough for the Fed to consider pulling back on or tapering its program to buy up debt, which has helped keep interest rates low and supported markets. The central bank might start to slow its debt purchases this year and end them entirely in mid 2014 if its economic outlooks turn out to be correct.
“The Fed sent more tapering signals than we anticipated for this meeting,” said IHS Global Insight U.S. Economist Paul Edelstein in an analysis. “But we maintain that the Fed is too optimistic on unemployment, and continue to believe that it won’t taper until 2014.”
European stock markets closed marginally lower before the Fed weighed in.
The FTSE MIB in Milan fell 0.9 percent to 16,045.52 as Paris’ CAC 40, declined 0.6 percent to 3,839.34, and the FTSE 100 in London and the DAX in Frankfurt were each down 0.4 percent, to 6,348.82 and to 8,197.08, respectively.
The euro traded at $1.34 against the dollar, while the pound fetched $1.57. The Swiss franc equaled $1.08 while the Swedish krona was at $0.15.
Among the stocks that lost the most ground were Safilo Group, which plummeted 11.4 percent to 13.90 euros after announcing that non-executive board member Luisa D. Delgado would become the company’s chief executive officer October 15, succeeding Roberto Vedovotto.
Among the gainers were Kering, formerly known as PPR, up 2.1 percent to 162.40 euros; Tod’s, 1.3 percent to 112 euros; Brunello Cucinelli, 4.4 percent to 19 euros, and Asos.com, 1.8 percent to 41.55 pounds.