Tapering fears are back. Stocks were in the red Wednesday amid new talk that the Federal Reserve may soon begin to slow the pace of its controversial asset purchases.
The Dow Jones industrial average and S&P 500 declined for a third day. It appears that statements from Chicago Fed president Charles Evans and Atlanta Fed president Dennis Lockhart on Tuesday about the Fed possibly pulling back on, or tapering, its bond purchases as soon as next month continued to spook investors. The Nasdaq slipped as well.
The prospect of the Fed cutting back on its massive quantitative easing campaign, which has helped push U.S. stocks to record highs, had investors feeling “uneasy,” according to Ishaq Siddiqi, a market strategist at ETX Capital in London. And since Evans is both a well known Fed dove and a member of the central bank’s policy committee this year, the comments are particularly unnerving for traders.
Despite the move lower, U.S. stocks have still gained 18% to 21% so far this year.
Investors around the world were selling Wednesday. Japan’s Nikkei index declined by 4%. The main indexes in China also dropped.
European markets were mosty lower in afternoon trading even though he Bank of England said it wouldn’t raise interest rates until British unemployment falls to 7% — which is unlikely to happen for three years.
What’s moving: Earnings continue to roll in Wednesday. CNNMoney parent Time Warner raised its guidance and reported a 25% jump in operating income, helped by strong revenue from movie blockbusters like “Man of Steel” and television shows like HBO’s “Game of Thrones” and “Girls.
AOL reported earnings and sales that beat estimates, and announced plans to buy video ad start-up Adap.tv for $405 million. The acquisition generated plenty of buzz among traders on StockTwits.
ESCapAdv: $AOL makes a video buy with Adap.TV for $400 million in cash and stock. Is AOL resurrected?
EricSteiman: $AOL Buys Adap.tv. Wouldn’t be shocked to see $YHOO making a video play near term
Zillow shares tumbled after the real estate website company swung to a second-quarter loss. But Zillow’s stock has been on a tear in 2013. Shares are up 200% year-to-date, as investors bet on a housing recovery. Since early July alone, shares have rallied 50%.
jfahmy: Zillow is a classic example of “buy the rumor, sell the news,” as the stock ran over +50% ahead of its earnings $Z
First Solar shares plunged a day after the solar panel maker widely missed analysts’ estimates for both profit and revenue. First Solar also trimmed its outlook. Shares of rival Solar City also tumbled, but traders were quick to not the differences between the two.
Tenaciousvalor: $SCTY business model is completely different from $FSLR. They’re operating at full capacity. Business is booming. I this for a fact! BULLISH
StarPower: I hate $FSLR. Always dragging $SCTY with it. Different companies. SCTY is much better hedged, no comparison.
Solar City, which is chaired by Tesla CEO Elon Musk, reports results after the bell. Tesla Motors and Green Mountain Coffee Roasters are also due to report results after the close.
