Fed notes push drop in stocks
The Central Bank mulled lesser stimulus efforts
NEW YORK — 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.
The minutes from the Fed's January meeting seemed to catch investors by surprise when they were released at noon MST. 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.
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 S&P 500 lost 11 points in the last hour and a half of trading.
The Dow Jones industrial average fell 108 points, or less than 1 percent, to close at 13,927.
The Nasdaq composite fell 49 points, or 1.5 percent, to 3,164.
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