Uncertainty over whether the Federal Reserve may coordinate with its Japanese counterpart and scale back stimulus measures in the U.S. sparked a wild and volatile trading session due to murkiness over the fate of borrowing costs in the world's largest economy.
Monetary stimulus tools such as the Fed's USD85 billion monthly bond-buying program flood the economy with liquidity to spur recovery and keep borrowing costs low, a combination that sends stock prices rising as a side effect.
At the close of U.S. trading, the Dow Jones Industrial Average finished down 0.76%, the S&P 500 index ended down 1.02%, while the Nasdaq Composite index fell 1.06%.
The Bank of Japan earlier left monetary policy unchanged, which sent the yen soaring by confounding expectations held by many investors for policy to loosen further.
The decision sparked uncertainty in currency markets as to whether the Federal Reserve will follow suit and end the days of globally loose monetary policy, which roiled equities markets.
On Monday, Standard & Poor’s earlier revised its long-term outlook on the U.S. credit rating to stable from negative and affirmed the country's AA+/A-1+ rating.
Unemployment reports are improving though the headline rate stands at 7.6%, far above the stated 6.5% Fed officials have said they would like to see.
Stocks plunged earlier, erased gains midway through the session and fell anew on concerns that volatility will rise in the coming weeks before the fates of U.S. and other monetary policies become clear.
Leading Dow Jones Industrial Average performers included UnitedHealth Group, up 0.41%, Pfizer, up 0.21%, and Procter & Gamble, up 0.06%.
The Dow Jones Industrial Average's worst performers included American Express, down 2.24%, Merck, down 1.86%, and Microsoft, down 1.75%.
European indices, meanwhile, finished lower.
After the close of European trade, the EURO STOXX 50 fell 1.30%, France's CAC 40 fell 1.39%, while Germany's DAX 30 finished down 1.03%. Meanwhile, in the U.K. the FTSE 100 finished down 0.94%.
Posts
