US stocks sharply declined yesterday right after the Feds Chairman Ben Bernanke appeared in a press conference. He pointed out the central bank may reduce bond purchases later this year if the economy strengthens.
On the press conference Wednesday afternoon, Fed chairman Ben Bernanke explained: “Our purchases are tied to what happens in the economy,” he said, cited by CNN. “We have no deterministic or fixed plan.”
For what is sure Federal Reserve has a plan but it shows to be flexible. If the economy keeps its pace of improving, Bernanke said it would be “appropriate to moderate the monthly pace of purchases later this year,” and taper stimulus package at the time the unemployment rate comes down to 7%, which the Fed expects will be around mid-2014.
After the press conference US stocks declined dramatically with S&P 500 recording its biggest fall in two weeks. All ten of the sectors included in S&P 500 fell, with telecoms and utility shares leading losses. Verizon Communications Inc. and Travelers Cos. declined around 2.2%. Sprint Nextel Corp. declined 4.4% after Dish Network Corp. said it won’t make a new offer for the mobile-phone carrier by a deadline. Adobe Systems Inc. rose 5.6% after reporting revenues beating estimates.
The KBW Bank Index declined 0.9 percent as all 24 of its members decreased.
Apples share price fell to its lowest since April losing 2% to a price of $423.
Nvidia Corp. gained 3.1 percent to $14.84. The largest maker of video graphics chips said it plans to expand revenue sources by licensing other chip-makers.
FedEx Corp. climbed 1.1 percent to $100.54. The companys forecast earnings per share for 2014 will rise as much as 13 percent to $7.04.
European stock-index futures sank after Ben Bernankes appearance at the press conference. U.S. futures and Asian shares declined. Futures on the Euro Stoxx 50 Index, the Euro area benchmark, lost 1.7 percent. Future contracts on the FTSE 100 Index plunged 1.3 percent. Standard & Poor’s 500 Index futures lost 0.5 percent.
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