US indices fall across the board as Fed’ concerns return

The Dow Jones Industrial Average, Nasdaq and S&P 500 all suffered losses during today’s trading as fresh concerns over the Federal Reserve’s monetary stimulus came to light. In addition to Esther George’s comments regarding the Federal Reserve’s next steps, the US markets saw negative mortgage data and all other major indices in Asia and Europe tumble throughout their respective sessions.

30 year fixed mortgages saw their index rate breach 4 percent, a statistic that had investors quaking in their boots as they feared for the stability of the housing market after its recent gains. Many analysts feel that the markets and economy as a whole will see something of a delayed pullback after the recent rallies. With the Federal Reserve pumping more and more funds into the economy and investors buying on the gains, safe in the knowledge that the next injection was never far away, they had a false sense of security.

The CIO of BMO Private Bank, Jack Ablin, said “The market is trying to come to grips with valuation… Where are the fundamental supports? The market became somewhat un-tethered from fundamental supports”. This theory is also supported by the sudden decline of 10 year treasury notes, which fell by more than 2 percent as investors redistributed their wealth back into safer assets.

The DJIA slumped to 14,960.59, a decline of 216.95 points, or 1.4 percent. The S&P 500, the broader US index, saw a fall of 22.48 points, closing at 1608.90 — a decline of 1.4 percent. The best performing index in the region was the Nasdaq, which slumped 1.3 percent. The composite closed at 3,401.48, falling by 43.78 points.

With investors still playing a guessing game with the Federal Reserve over their next move, it is unlikely that we will see a consistent uptrend in the US until the minutes for the next Fed’ meeting are released.