After moving mostly higher over the course of the two previous sessions, stocks pulled back sharply during trading on Wednesday. A negative reaction to the Federal Reserve's monetary policy announcement weighed on the markets in afternoon trading.
The major averages saw some volatility following the announcement from the Fed, closing firmly in the red. The Dow plunged 206.04 points or 1.4 percent to 15,112.19, the Nasdaq tumbled 38.98 points or 1.1 percent to 3,443.20 and the S&P 500 plummeted 22.88 points or 1.4 percent to 1,628.93.
The sharply lower close by stocks came on the heels of the release of a statement from the Fed following its two-day monetary policy meeting.
As was widely expected, the Fed left interest rates unchanged and maintained the pace of its asset purchase program at $85 billion a month.
However, the statement from central bank said that downside risks to the outlook for the economy and the labor market have diminished since the fall. The Fed also acknowledged further improvement in labor market conditions.
The relatively upbeat comments regarding the economic outlook added to recent concerns about the Fed tapering its asset purchase program in the near future.
"It is these two comments in the statement that caused the spike in interest rates and subsequent drop in equities," said Peter Boockvar of Morgan Stanley.
He added, "Bottom line, the Fed acknowledged a slightly better economic outlook and the market can only take that as a verbal 1st step to some change in policy at their next meeting in July."
In his press conference, Fed Chairman Ben Bernanke said the central bank might be able to scale back its asset purchases later this year if economic conditions warrant.
Despite the pullback by the broader markets, shares of FedEx (FDX) ended the day higher after the delivery giant reported adjusted fourth quarter earnings that came in above analyst estimates. The company also forecast 7 to 13 percent earnings growth in fiscal 2014.
Software maker Adobe Systems (ADBE) also moved to the upside after reporting better than expected adjusted second quarter earnings. The company also reported revenues for the quarter that fell year-over-year but matched analyst estimates.
Meanwhile, shares of Tetra Tech (TTEK) came under considerable selling pressure after the consulting and engineering services company forecast a third quarter loss.
Sector News
Gold stocks showed a substantial move to the downside on the day, dragging the NYSE Arca Gold Bugs Index down by 3.3 percent. With the drop, the index fell to a one-month closing low.
The weakness among gold stocks came as the price of the precious metal ended regular trading moderately higher but pulled back sharply in electronic trading.
Significant weakness also emerged among housing stocks, as reflected by the 3 percent loss posted by the Philadelphia Housing Sector Index. Meritage Homes (MTH) and Ryland Group (RYL) posted notable losses.
Commercial real estate stocks also came under considerable selling pressure, resulting in a 3.1 percent drop by the Morgan Stanley REIT Index.
Most of the other major sectors also showed notable moves to the downside on the day, with tobacco, utilities, telecom, and health insurance stocks posting steep losses.
Other Markets
In overseas trading, stock markets across the Asia-Pacific region turned in another mixed performance during trading on Wednesday. Japan's Nikkei 225 Index surged up by 1.8 percent, while Hong Kong's Hang Seng Index tumbled by 1.1 percent.
Meanwhile, the major European markets all moved to the downside on the day. While the French CAC 40 Index fell by 0.6 percent, the U.K.'s FTSE 100 Index and the German DAX Index both ended the day down by 0.4 percent.
In the bond market, treasuries pulled back sharply following the release of the statement from the Fed. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, jumped 12.9 basis points to 2.311 percent.
Looking Ahead
Trading on Thursday may continue to be impacted by reaction to the Fed statement and the outlook for the central bank's stimulus program.
A slew of economic data is also scheduled to be released on the day, including reports on weekly jobless claims, existing home sales, and Philadelphia-area manufacturing activity.
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Market Analysis
June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.