Fed Maintains QE3, Stocks Drop

Michael Teague  |

Stocks pared back recent gains on Wednesday, dropping much lower after the Federal Reserve announced no changes to its $85 billion monthly in asset purchasing program at the traditional post-FOMC meeting press-conference.

Trading during the month of October has seen stocks at their highest since July, but continued anemic-to-modest signs of US economic growth are still falling short of Fed targets for unemployment and inflation . This situation has been aggravated by the 2-week government shutdown that only just ended, and the Central Bank will likely want to wait out the holiday season in order to get a more accurate picture of economic conditions in the US before making any changes to monetary policy.

The Standard & Poor’s 500 index was off by 0.49 percent to 1,763.31, while the Dow Jones Industrial Average shed 0.39 percent to 15,618.76 points, and the NASDAQ was off 0.55 percent to 3,930.62 points.

Wednesday’s slew of earnings reports were released as Automatic Data Processing (ADP) reported that the private sector added 130,000 new jobs in October. The figure was smaller than the 150,000 jobs that economists had been hoping for, and the second-worst month of private sector job-creation in the last year.

The Dow Jones Industrial Average ended the day with most components in the red, with drug manufacturer Pfizer Inc. (PFE) shedding one percent after the company’s Q3 earnings report released the previous morning missed revenue expectations. Consumer goods giant Procter & Gamble (PG) and IBM (IBM) ended the day more than one percent lower.

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The Standard & Poor’s 500 index saw money-wiring service Western Union (WU) shed over 12 percent of its share-price after its income statement for the third quarter contained poor guidance for the rest of the year as the regulatory environment becomes harmful to its business. US auto-manufacturing giant General Motors (GM) gained over 3 percent by the closing bell after Q3 earnings beat on both top and bottom lines.

Tech shares took heavy losses on the NASDAQ, with Facebook (FB) down on heavy trading ahead of the company’s after-hours release of its earnings report. Whatever the number say, the world’s most popular social media platform is going to have to contend with the competition that is sure to result from greatly anticipated IPO for Twitter in the near future, with other social media companies like Pinterest looking to be preparing to do the same. Despite the pessimism however, Facebook beat earnings and revenue, and shot up after hours.

Massively popular purveyor of chicken-wings Buffalo Wild Wings Inc. (BWLD) added another 9 percent on the day on news of a 66 percent spike in net income for the recently-ended quarter. Readers preparing themselves for the holiday season are strongly encouraged to have a look at our guide to ETFs tracking equities in the consumer discretionary sector.

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