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Dow Finishes Down 108, Nasdaq Drops 49

The stock market posted its biggest loss this year on news that Federal Reserve officials suggested the central bank scale back its effort to keep borrowing costs low. Judging by the market's reaction, the Fed appears to be closer to ending its support for the economy than traders had expected, said Dan Greenhaus, chief global strategist at the brokerage BTIG. "We're at a point now where we're discussing how we're going to end this, not whether it's going to end," he said.
Associated Press,

NEW YORK (AP) -- The stock market posted its biggest loss this year on news that Federal Reserve officials suggested the central bank scale back its effort to keep borrowing costs low.

Minutes from the Fed's January meeting seemed to catch investors by surprise when they were released at 2 p.m. EST. Several Fed policymakers worried that the bank's program of buying $85 billion of bonds each month could eventually unsettle financial markets or cause the bank to take losses. Even so, most of the Fed officials thought the economy faced fewer risks than in December.

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Judging by the market's reaction, the Fed appears to be closer to ending its support for the economy than traders had expected, said Dan Greenhaus, chief global strategist at the brokerage BTIG. "We're at a point now where we're discussing how we're going to end this, not whether it's going to end," he said.

The S&P 500 index sank 18.99 points to 1,511.95, a loss off 1.2 percent. That's the biggest one-day drop since Nov. 14, 2012.

By buying bonds, the Fed drives up their prices and lowers interest rates, which have stayed at record lows. That keeps costs low for mortgages and other types of loans.

The major indexes drifted sideways in morning trading then turned lower in the early afternoon after Caterpillar reported weaker sales of its heavy trucks and mining equipment. Stocks fell further after traders had time to digest the Fed minutes. The S&P 500 lost 11 points in the last hour and a half of trading.

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The Dow Jones industrial average fell 108 points, or less than 1 percent, to close at 13,927. Merck helped curb the Dow's fall, rising 1 percent, on news that it teamed up with a Korean drugmaker to create drugs.

The Nasdaq composite fell 49 points, or 1.5 percent, to 3,164.

News that Apple's major supplier, Foxconn, stopped hiring at its largest plant in China helped push down Apple's stock. Foxconn reportedly said the hiring freeze was not caused by slumping orders for iPhones. Apple fell $11.14 to $448.85.

The stock market surged at the start of the year then drifted slightly higher in recent weeks with few major events to drive trading one way or another. That could change as soon as Congress returns from vacation next Monday. Deep federal spending cuts are scheduled to start March 1 unless Congress and the White House find a way to avoid them.

Both the Dow and the S&P 500 have gained 6 percent for the year. The Nasdaq is up 5 percent.

Before the Fed minutes came out, Phil Orlando, the chief market strategist at Federated Investors, said he believed the stock market had climbed too quickly and was prone to a big drop. He expected the S&P 500 to get knocked down by 3 percent or more in the coming weeks. Another budget battle in Washington could be the trigger.

"There are a lot of us who say, 'We're a little bit ahead of ourselves here,'" Orlando said. "I still expect an all-time high for the S&P 500 this year, but it's going to get there in fits and starts."

Even though housing construction slowed down in January, the Department of Commerce reported Wednesday that new housing starts remained strong. Builders started construction at an annual rate of 890,000 last month, down 8.5 percent from December. Applications for building permits increased.

The Dow closed at its highest level of the year Tuesday, bringing it within one percent of 14,164, the record high reached more than five years ago.

In the U.S. government bond market, the yield on the 10-year Treasury note slipped to 2.01 percent from 2.03 percent late Tuesday. The yield has climbed steadily higher since the start of the year, when it traded around 1.70 percent.

Among companies making moves:

- GPS device maker Garmin slumped 9 percent, the biggest drop in the S&P 500 index, after the company's results missed analysts' forecasts. Demand has waned for handheld navigation devices as more customers use maps on their smartphones. Garmin lost $3.70 to $35.54.

- Food giant ConAgra gained 20 cents to $33.65 after it raised its profit forecast for the year. The company, whose brands include Chef Boyardee, said its acquisition of Ralcorp will add a nickel per share to adjusted earnings this year.

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Ratings

Overnights, adults 18-49 for September 25, 2016
  • 1.
    5.5/18
  • 2.
    2.6/8
  • 3.
    1.2/4
  • 4.
    0.9/3
  • 5.
    0.5/2
  • 6.
    0.2/1
Source: Nielsen

Reviews

  • Rob Owen

    Easily fall’s best broadcast network comedy pilot, NBC’s The Good Place offers a clever high-concept premise that’s complemented with intelligent, sometimes absurdist humor. Created by Michael Schur, co-creator of NBC’s Parks and Recreation, The Good Place is a highly serialized series that’s essentially set in heaven and stars Kristen Bell and Ted Danson. NBC made five episodes of The Good Place available for review, and the show not only holds up, but also it improves, deepening characters that initially feel one-note and frequently leaving viewers guessing with cliffhanger endings to many of the episodes. The combination of snappy dialogue and winning but flawed characters makes The Good Place a great bet for fans of smart TV comedy.

  • Maureen Ryan

    Pitch has swagger, for good reason. It gets the big things right; the Fox drama about the first female baseball player in the Major Leagues is one of the year’s most assured and exciting debuts. But part of what impresses about the pilot is also the way it confidently strings together so many small but telling details. Ginny (Kylie Bunbury) is the first woman to be called up from the minors to the big leagues, and no show since Friday Night Lights has done a better job of portraying the internal and external pressures that weigh heavily on young athletes asked to do much more than merely succeed on the field. Pitch will likely do a good job of getting viewers to root for it. The hope is that the show won’t be an impressive, short-lived curiosity, but rather a long-term phenomenon.

  • Kevin Fallon

    In a fall TV season that’s already making a splash for championing diverse, distinctive voices in an array of projects that they created, wrote, and starred in, Better Things on FX stands out. The show is created by, written by, and starsPamela Adlon. She plays Sam Fox, the single mother of three daughters modeled after her own reality-show-ready experience raising three girls in Los Angeles following a divorce. Sam is also, like Adlon, a working actress — on shows both raunchy, a la Californication, and animated for children, like her role on Recess. It’s a refreshingly blunt take on single motherhood without sacrificing the warmth of parental love, portraying the dance between selfishness and selflessness that’s at the heart of being a parent — especially one weathering the hormonal fireworks of a household of four women at different ages.

  • David Wiegand

    The fall TV season doesn’t count as much as it used to — we already know that. But no matter how many retreads the broadcast networks throw at viewers in the next few months, this fall will be memorable because of the premiere of Atlanta on Tuesday, Sept. 6, on FX. The half-hour comedy created by and starring Donald Glover (Community), simply and brilliantly recalibrates our expectations of what a TV comedy is and how black lives are portrayed on the medium.

  • Louisa Ada Seltzer

    The second reboot of the 1980s John Candy movie Uncle Buck, bumped by ABC from midseason, has the same tired jokes you'll find on any second-rate sitcom. Too bad, because Mike Epps is appealing and ABC would be wise to keep him around for future shows, but there’s just not enough to this show to suggest it will last past summer. It also airs against NBC’s America’s Got Talent, summer’s No. 1 program on broadcast, which may make it even harder to find an audience.

  • Neil Genzlinger

    Bryan Cranston brings his Tony Award-winning interpretation of President Lyndon B. Johnson to television in an adaptation of the Robert Schenkkan play All the Way, and it’s still quite a sight to behold, just as it was on Broadway in 2014. Nothing beats witnessing this kind of larger-than-life portrayal onstage, of course. But the television version, presented by HBO, offers plenty of rewards, allowing Cranston to work the close-ups and liberating him from the confines of a theater set. Cranston’s performance is a gem — in his hands, this accidental president comes across as an amazing bundle of contradictions, someone who seems at once too vulgar for the job and just right for it.

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