Stocks retreat after Fed news
First Posted:
The Associated Press
NEW YORK — Stocks pared their gains Wednesday as the Federal Reserve reminded investors that it would end several of its extraordinary supports for the economy in the coming year.
Investors had anticipated that several of the programs would be wound down as expected next year, but policymakers hadn’t confirmed the precise timing.
The Fed said it would leave interest rates near zero, as the market had expected, but policymakers also noted that weakness in the job market is “abating.” Fed governors made the assessment in a statement after a two-day meeting to discuss interest rate policy.
Money managers are seeking any and all clues about when the Fed may feel the economy is strong enough to tolerate higher interest rates, which will help keep inflation in check.
Stocks had been higher ahead of the Fed’s announcement after a benign reading on consumer price inflation eased concerns that the Fed would be forced to raise interest rates any time soon. The statement from the central bank reinforced that notion. Policymakers repeated that inflation is likely to remain under control and that interest rates would remain low for “an extended period.”
Earlier Wednesday the government reported that consumer prices excluding food and energy were flat in November, signaling that inflation isn’t working its way into the economy. It was the first time that “core” inflation was unchanged after 10 monthly increases.
Gold climbed, while crude oil rose $2.45 to $73.14 per barrel on the New York Mercantile Exchange.