Stocks fell sharply Wednesday after the Federal Reserve kept rates near zero, maintained its bond-buying program at the current pace but said it saw signs that an economic recovery “has moderated in recent months.”
“The pace of the recovery in economic activity and employment has moderated in recent months, with weakness concentrated in the sectors most adversely affected by the pandemic,” the central bank said in a statement following its first meeting of 2021.
The Federal Reserve also committed to maintaining its bond-buying program at $120 billion a month until it witnessed “substantial further progress” in employment and on its inflation goals.
In a press conference, Fed Chairman Jerome Powell emphasized it would take “some time” before that progress was made.
The Dow Jones Industrial Average fell 600 points, or 1.94%, to 30,336, the S&P 500 slumped 2.44% and the Nasdaq dropped 2.25%. Equities appeared headed for their worst day since late October.
Stocks had been lower Wednesday ahead of the Fed’s announcement as investors turned cautious with earnings from Tesla (TSLA) – Get Report and Apple (AAPL ) – Get Reportscheduled for after the closing bell.
Market sentiment also was weighed down by uncertainty surrounding President Joe Biden’s $1.9 trillion coronavirus relief plan given the slim majority of the Democrats in the Senate, and data showing that confirmed global cases of Covid-19 surpassed 100 million.
Biden said the U.S. government was working to buy 200 million more doses of Covid-19 vaccines, enough to fully inoculate nearly every American by the end of the summer, according to the president. The administration intends to order 100 million more doses each from Pfizer (PFE) – Get Report and Moderna (MRNA) – Get Report.
“Worry about the Fed tapering its stimulus is premature right now, as the slow Covid-19 vaccine rollout will likely delay any kind of Fed stimulus withdrawal until well into 2022,” said Danielle DiMartino Booth, CEO and chief strategist of Quill Intelligence.
Microsoft (MSFT) – Get Report was rising 1.3% Wednesday after the software giant posted much stronger-than-expected fiscal second-quarter earnings thanks in part to a surge in cloud revenue and a big jump in personal computer sales.
Boeing (BA) – Get Report reported a fourth-quarter loss well wider than analysts’ expectations and delayed the launch of its 777X widebody airplane as it continues to grapple with generational changes in airline demand triggered by the global coronavirus pandemic.