Stocks fall after Fed says US still needs support

October 30, 2013

San Francisco (Oct 30)  The stock market retreated from all-time highs Wednesday after the Federal Reserve said the U.S. economy still needed help from its stimulus program.

In its latest policy statement, the nation's central bank said it will continue its $85 billion a month bond-buying program and would keep its benchmark short-term interest rate near zero. The bond purchases are designed to keep borrowing costs low for consumers and businesses, thereby stimulating the economy.

The decision was mostly expected by investors. Since the Fed's last meeting in September, the economy suffered a blow because of the 16-day partial shutdown of the U.S. government and the near-breach of the nation's borrowing limit.

As a result, investors thought it would be highly unlikely the Fed would make any changes to its stimulus program until early next year, after there was more evidence that the U.S. could grow without the central bank's help.

The next time the Fed will revisit its bond-buying program will be at its mid-December meeting.

The Dow Jones industrial average was down 45 points, or 0.3 percent, to 15,643 as of 3 p.m. Eastern time . It was down about 30 points shortly before the Fed's announcement came out at 2 p.m.

The Standard & Poor's 500 index fell six points, or 0.4 percent, to 1,765. The Dow and S&P 500 closed at record highs Tuesday.

The Nasdaq composite fell 20 points, or 0.5 percent, to 3,931.

Bond prices also fell after the Fed's announcement. The yield on the benchmark U.S. 10-year Treasury note rose to 2.52 percent from 2.50 percent the day before.

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