Fed's Monetary Policy

U.S. Stocks Tumble Following FOMC Minutes

The Dow Jones, S&P 500 and Nasdaq Composite Index all fell on Wednesday.

The Dow and broader U.S. stock market tumbled on Wednesday, as investors dissected the minutes from the Federal Reserve’s December policy meeting.

Wall Street’s major indices were down at the close, with the Dow Jones Industrial Average (DIA) falling 392.35 points, or 1.1%, to 36,407.30. The blue-chip index reached a new all-time high on Tuesday.

The broad S&P 500 Index (SPY) of large-cap stocks fell 1.9% to settle at 4,700.67. Most sectors finished in negative territory.

Meanwhile, the technology-focused Nasdaq Composite Index (QQQ) declined 3.3% to close at 15,100.17.

A measure of implied volatility known as the CBOE VIX (VXX) rose sharply on Wednesday. The so-called “investor fear index” reached an intraday high of 19.28 on a scale of 1-100, where 20 represents the historical average. It would eventually settle up 14.4% at 19.35.

In commodities, oil prices rose on Wednesday, as U.S. West Texas Intermediate futures gained 46 cents, or 0.6%, to $77.45 a barrel on the New York Mercantile Exchange. Brent, the international futures contract, climbed 46 cents, or 0.6%, to $80.46 a barrel.

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In precious metals, gold prices were little changed, as the February futures contract fell $1.30, or 0.1%, to $1,813.30 a troy ounce on the Comex division of the New York Mercantile Exchange. Silver futures declined 20 cents, or 0.9%, to trade at $22.86 a troy ounce.

The Final Word: The minutes of the Federal Open Market Committee’s December policy meeting showed that central bankers were concerned about inflation. The general consensus on Wall Street is that the Fed will raise interest rates more aggressively this year to combat rising inflation.