US stocks drop amid Fed stimulus tapering, emerging currencies sink

US stocks substantially declined, pushing the Standard & Poor’s 500 Index to a two-month low, as the Federal Reserve vowed it would make further cuts to economic stimulus and as emerging-market currencies weakened.

The S&P 500 slumped 1% to 1,774.20 by 4:34 p.m. in New York, the lowest close since November 12 after European stocks retreated. The Dow Jones Industrial Average dropped 189.77 points, or 1.2%, to 15,738.79 today. About 7.8 billion shares changed hands in the U.S., 26% above the three-month average. Facebook Inc. rose after market on better-than-estimated earnings.

“I know a heck of a lot of people who still want to get money into the market and feel they missed out last year. They are looking for an entry point,” said to Wall Street Journal, Bill Stone, chief investment strategist at PNC Wealth Management, which oversees more than $125 billion in Philadelphia. Mr. Stone is among those who see a 10% decline coming; he is just beginning to wonder if it is going to happen now.

The Fed left unchanged its statement that it will probably hold its target interest rate near zero “well past the time” that the unemployment rate falls below 6.5%, “especially if projected inflation” remains below the committee’s longer-term goal of 2%.

Policy makers pressed on with a reduction in the purchases intended to speed the U.S. economy’s recovery from the worst recession since the Great Depression, even after payroll growth slowed in December and amid the rout in emerging-market currencies.

In corporate news, Fiat lost 4.9% after the automaker that bought full control of Chrysler last week forecast 2014 profit that trailed analysts’ estimates.

Yahoo slumped 8.7% to $34.89. The company forecast first-quarter sales that signaled slowing growth amid competition from Google Inc. and Facebook. Yahoo’s fourth-quarter net income rose 28% to $348.2 million, while net sales slipped to $1.2 billion from $1.22 billion a year ago, the company said.

AT&T Inc. retreated 1.2% to $33.31. The second-largest U.S. wireless carrier forecast 2014 earnings-per-share will grow at a “mid-single-digit” rate, compared with analysts’ estimates for an increase of 7%.

Boeing slumped 5.3%, the most since August 2011, to $129.78. The world’s largest plane maker forecast a profit for 2014 that fell short of analysts’ estimates as the pace of its jet orders slows after the second-highest year in 2013.