Stocks slip on lack of signal from Fed
NEW YORK» Disheartened investors bid stocks lower yesterday after the Federal Reserve, raising interest rates for the 14th time in nearly two years, failed to give Wall Street a clear signal on when those rate hikes would end. A disappointing earnings report from Google Inc. after the close of regular trading made it likely the losses would continue when trading resumed yesterday.
Google suffered its first earnings "miss," with its fourth-quarter results falling below the market's expectations. Technology stocks dropped in after-hours trading as investors expressed their dismay by selling.
The Fed, in its statement accompanying its quarter-point increase in rates, said "some further policy firming may be needed" to keep inflation under control -- leaving the door open for another hike at the next meeting in March and beyond.
The major indexes were already down ahead of the Fed's decision -- the last one under outgoing Chairman Alan Greenspan -- and the hint of at least one more rate hike left investors uncertain, although most analysts felt the program of continued, measured rate hikes was at an end.
"The knee-jerk reaction was things aren't as sure as everybody thought, but when I look at this, this is right in the middle of what my expectations were," said Chris Johnson, manager of quantitative analysis at Schaeffer's Investment Research in Cincinnati. "They left a rate hike in the deck here in case they need it, but that doesn't mean more of the same."
The Dow Jones Industrials fell 35.06, or 0.32 percent, to 10,864.86.
Broader stock indicators were modestly lower. The Standard & Poor's 500 index lost 5.12, or 0.4 percent, to 1,280.08, and the Nasdaq composite index slipped 0.96, or 0.04 percent, to 2,305.82.
Bonds edged higher on the Fed news, with the yield on the 10-year Treasury note fell to 4.52 percent from 4.53 percent late Monday. The dollar fell against most major currencies, while gold prices rose.
Crude oil futures fell after the Organization of Petroleum Exporting Countries, meeting in Vienna, decided not to cut oil production. A barrel of light crude settled at $67.92, down 43 cents, on the New York Mercantile Exchange.
Google tumbled $53.65, or 12.4 percent, to $379.01 in electronic after-hours trading once the Internet company announced its earnings. While profits more than doubled from the year-ago quarter, Google missed analysts' forecasts by 22 cents per share.
Other tech shares also dropped in after-hours trading.