US stocks have ended the day solidly lower after the Bank of Japan’s status-quo policy decision revived concerns about the winding down of central bank stimulus measures.
The Dow Jones Industrial Average fell 116.57 (0.76 per cent) to 15,122.02.
The broad-based S&P 500 dropped 16.68 (1.02 per cent) to 1,626.13, while the tech-rich Nasdaq Composite Index sank 36.82 (1.06 per cent) to 3,436.95.
The losses came after the Bank of Japan opted to maintain its aggressive asset-purchase program unchanged, saying the world’s third-largest economy was “picking up”.
“The expectation was that Japan would keep increasing it,” said Andrew Fitzpatrick of Ensilage Associates. “There was a sort of a built-in belief that there was going to be more there.”
The restraint in Japan also raised questions about the US Federal Reserve’s future direction of policy measures ahead of next week’s Federal Open Market Committee meeting.
The Fed has signalled it wants to begin to craft a plan for tapering its $85 billion a month bond-purchase program.
“The threat of the easy money being taken away is enough to scare investors,” said David Levy, Kenjol Capital Management.
Banking stocks recorded outsized losses, including Morgan Stanley (down 3.9 per cent) Goldman Sachs (down 2.5 per cent) and Wells Fargo (down 1.5 per cent).
Stay informed, daily
Other large declines came from General Motors (down 2.3 per cent) and American International Group (down 2.2 per cent).
News Corp. slipped 0.9 per cent after shareholders approved a measure to divide the company in two. The company said it is on track to complete the split on June 28.
Bond prices rose. The yield on the 10-year US Treasury slipped to 2.20 per cent from 2.22 per cent late Monday, while the 30-year dropped to 3.33 per cent from 3.37 per cent. Bond prices move inversely to yields.
Want to see more stories from InDaily SA in your Google search results?
- Click here to set InDaily SA as a preferred source.
- Tick the box next to "InDaily SA". That's it.
