Wall St falls as investors lose confidence

US stocks fell yesterday, with the Dow sliding more than 100 points on another volatile day as traders extended a selloff driven by concern about central banks winding down their stimulus measures.

The S&P 500 was caught between support near its 50-day moving average at 1,610.55 and resistance at its 14-day moving average at 1,637.27. The S&P 500 has closed below its 50-day moving average only once this year – in mid-April.

Traders have kept their focus on the possibility that the Federal Reserve will reduce its monthly bond purchases in coming months, removing one of the pillars of the US stock market’s rally this year.

These worries have sparked volatility and triggered a pullback in US stock indexes from historic highs.

The Dow yesterday swung more than 200 points for the seventh time in the past 15 trading days, going back to Fed chairman Ben Bernanke’s latest congressional testimony on 22 May. At the time, he hinted that the Fed may begin to reduce its quantitative easing – consisting of $85bn a month in bond purchases – in the coming months.

The CBOE Volatility Index, known as the VIX, shot up 8.9 percent to 18.59. The VIX has jumped more than 20 percent so far this week.

The Dow Jones industrial average dropped 126.79 points or 0.84 per cent, to close at 14,995.23. The S&P 500 fell 13.61 points or 0.84 per cent, to 1,612.52. The Nasdaq Composite lost 36.52 points or 1.06 per cent, to end at 3,400.43. The S&P 500 has fallen 3.4 per cent from its record closing high of 1,669.16 set on 21 May.