Investors struggled to figure out a barrage of signals from the Federal Reserve, oil markets and corporate America Wednesday, and stocks fell sharply for second straight day.
The Federal Reserve issued its first policy statement of the year, making clear that it would remain “patient” in raising interest rates from near zero, which was expected. But it also strengthened its assessment of the U.S. economy, noting it is expanding at a solid pace and generating strong job growth.
That’s good news for Main Street and Corporate America, but signals that the Fed is moving closer to raising rates, even if it’s not contemplating an imminent hike.
“The market is, on one hand, happy the Fed is saying things look solid, but it means at some point we will get that first rate hike,” said Quincy Krosby, market strategist for Prudential Financial.
Investors were buffeted by other cross currents. Impressive earnings from Apple and Boeing made investors optimistic and lifted stocks early. But when benchmark U.S. oil later sank to its lowest level in nearly six years, investors worried about worsening earnings prospects for energy companies.
The Energy Department reported that U.S. oil inventories rose to their highest levels ever recorded. Those high supplies drove crude prices to the lowest level since March 2009. Benchmark U.S. crude fell $1.78 to close at $44.45 a barrel in New York.
All told, the Dow Jones industrial average dropped 195.84 points, or 1.1 percent, to close at 17,191.37.The Standard & Poor’s 500 index lost 27.39 points, or 1.4 percent, to 2,002.16. The Nasdaq composite dropped 43.50 points, or 0.9 percent, to 4,637.99.
