March 8, 2014
Fed taper anxiety triggers profit taking on Wall St
US stocks posted their largest drop in a month today as traders locked in recent gains after a provisional budget deal out of Washington removed one of the near-term reasons for the Fed to keep up its current pace of economic stimulus.
The bipartisan agreement, reached late yesterday, would end three years of impasse and fiscal instability in Washington that culminated in October with a partial government shutdown.
The Dow Jones industrial average fell 129.60 points or 0.81 percent, to end at 15,843.53. The S&P 500 slid 20.40 points or 1.13 percent, to close at 1,782.22. The Nasdaq Composite dropped 56.677 points or 1.4 percent, to finish at 4,003.813.
European shares steadied after falling in the previous session, with RBS a big loser on the departure of its finance chief, as uncertainty over the outlook for US monetary policy looked set to cap any broader gains.
The FTSEurofirst was up 0.1 percent at 1,263.98 having dropped 0.7 percent on Tuesday. The index is some 4 percent below a five-year high of 1,316 hit in early November. The euro zone's blue-chip Euro STOXX 50 index , was up 0.2 percent at 2,966.67 points.
Shares have been drifting lower on uncertainty over when the US Federal Reserve will start scaling back its monetary stimulus, with recent robust US data having re-ignited speculation it could start the process before year-end.
Meanwhile, Japan's Nikkei share average declined which traders attributed to a reduction in investor exposure to risky assets as they waited to see if the US Federal Reserve will taper its stimulus soon. The Nikkei ended down 0.6 percent at 15,515.06, extending its declines into a second day. The Topix fell 0.5 percent to 1,250.45.