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 The central bank dropped the U.S. unemployment rate as its
definitive yardstick for gauging the economy's strength and made
clear it would rely on a wide range of measures in deciding when to
raise interest rates.
Equities extended declines after Fed Chair Janet Yellen said the
"considerable period" between the end of its quantitative easing
program, known as QE, and the first rate increase from the central
bank could be six months.
With QE forecast to wind down sometime near the end of the year, a
six-month lag would move up the timetable for the Fed's first hike,
which many market participants had been expecting in the second half
of 2015.
"She certainly moved it up a little bit, and I don't think the
market was expecting that at all because she is widely viewed as
being more on the dovish side of the aisle than she is on the
hawkish side," said Peter Kenny, CEO of Clearpool Group in New York.
"That is not a particularly hawkish comment, but the fact of the
matter is, it was not expected."
The Fed also said it would cut its monthly purchases of U.S.
Treasuries and mortgage-backed securities to $55 billion, from $65
billion.
The S&P 500 was within 1 percent of its record closing high, though
economic bellwether FedEx Corp <FDX.N> hit a sour note in its
outlook. Geopolitical concerns related to Ukraine also stayed in
focus.
FedEx posted results below expectations and gave a weak full-year
profit forecast, but the package shipper said it had been
significantly hurt by winter storms, and the stock slipped 0.1
percent to close at $138.38.
The Dow Jones industrial average <.DJI> fell 114.02 points or 0.70
percent, to end at 16,222.17. The S&P 500 <.SPX> slipped 11.48
points or 0.61 percent, to finish at 1,860.77. The Nasdaq Composite
<.IXIC> dropped 25.711 points or 0.59 percent, to close at
4,307.602.
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Equities had rallied to start the week, buoyed by easing
geopolitical concerns, though trading volume has been light. The S&P
500 <.SPX> has climbed 1.7 percent over the previous two days, the
best back-to-back performance for the benchmark index since early
February.
First Solar Inc <FSLR.O> surged 20.6 percent to $69.40 and ranked as
the S&P 500's best performer after the company forecast a rise of up
to 21 percent in revenue this year. First Solar also said it was
developing cost-effective solar plants with General Electric Co <GE.N>.
Volume was light, with about 6 billion shares traded on U.S.
exchanges, below the 6.7 billion average so far this month,
according to data from BATS Global Markets.
Volume is expected to surge on Friday as options expiration takes
place alongside multiple index rebalances. Credit Suisse estimates
$14 billion in gross trading will stem from the S&P 500 index
rebalance, with another $6 billion coming from rebalancing in other
indexes.
Declining stocks outnumbered advancing ones on the New York Stock
Exchange by a ratio of 3 to 1. On the Nasdaq, nearly two stocks fell
for every one that rose.
(Editing by Jan Paschal)
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