Wall St hit by fears over end to stimulus

US stocks fell yesterday with the S&P 500 posting its biggest decline in three weeks, after minutes from the latest US Federal Reserve meeting showed some officials were open to tapering large-scale asset purchases as early as at the June meeting.

Trading was volatile – the Dow and the S&P indexes both rose more than one per cent during the morning, but fell more than one per cent in the afternoon.

The minutes followed comments from chairman Ben Bernanke, who said the Fed could decide to scale back the pace of bond purchases at one of the “next few meetings” if the economic recovery looked set to maintain forward momentum.

The comments were a blow to a market that had accelerated after Bernanke said the central bank needed to see further signs of traction in the economy before it tapered stimulus. “This is a very sensitive market and particularly sensitive to any notion that tapering will come too soon,” said Quincy Krosby, market strategist at Prudential Financial in New York.

“No one wants to be selling if the data reaches the point when the Fed begins to specifically talk about tapering. The market doesn’t wait for the Fed to move. It will move before. That's how it operates.”

The Dow Jones industrial average was down 80.41 points, or 0.52 per cent, at 15,307.17. The Standard & Poor’s 500 Index was down 13.81 points, or 0.83 per cent, at 1,655.35. The Nasdaq Composite Index was down 38.82 points, or 1.11 per cent, at 3,463.30.

The S&P 500 rose as high as 1,687.18 and fell as low as 1,648.86 during yesterday’s trading session while the Dow rose as high as 15,542.40 and fell as low as 15,265.96. All 10 sectors on the S&P 500 closed negative, with energy and utilities leading the decline.