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Strategies & Market Trends : The Financial Collapse of 2001 and Beyond

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From: 2MAR$4/5/2012 3:21:45 AM
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World stocks, gold sink on less hope of Fed stimulus
Reuters

Stocks and the euro fell on Wednesday after the U.S. Federal Reserve dimmed hopes for fresh asset-buying, further underlining its divergence with an embattled Europe that faces recession and remains firmly in crisis-fighting mode.

The Federal Reserve's minutes from its March meeting, released Tuesday, suggested the appetite for a third dose of quantitative easing, so-called QE3, has decreased.

The news further underscored the United States' divergence from a Europe facing recession, while the Spanish auction results suggested the effect of European funding operations was waning.

Equity markets have rallied steadily since the ECB's stimulus efforts eased funding pressures for euro-zone banks. Optimism about more stimulus from the Fed has also boosted stocks. The U.S. benchmark S&P 500 is up about 30 percent since early October.

"The major support for the economy and for the financial markets over the past two years has been stimulus, and without it, it's still a question whether these economies can make it on their own," said Bruce Bittles, chief investment strategist at Robert W. Baird & Co in Nashville.

The MSCI all-country world equity index (.MIWD00000PUS) slid 1.9 percent, while the three major U.S. stock indexes ended down sharply.

The FTSEurofirst 300 Index of top European shares (FSI:^E3X) fell 2 percent to close at 1,050.99.

The Dow Jones industrial average (DJI: ^DJI - News) fell 124.80 points, or 0.95 percent, to close at 13,074.75. The Standard & Poor's 500 Index (MXP: ^GSPC - News) was down 14.42 points, or 1.02 percent, at 1,398.96. The Nasdaq Composite Index (NAS:^COMP) was down 45.48 points, or 1.46 percent, at 3,068.09.

It was a second day of losses on the Fed minutes for stocks, with most S&P 500 sectors declining. Energy, financial and technology stocks led the fall.

More »Shares, Euro Fall As Fresh Fed Stimulus Hopes Fade
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