FED TAPERS AND STOCKS DIVE: What You Need To Know About The US Market Overnight

Stocks tumbled and the Federal Reserve reduced the pace of monthly bond purchases by another $US10 billion, to $US65 billion.

First, the scoreboard:

  • Dow: 15,739.69 (-188.87, -1.19%)
  • S&P 500: 1,774.22 (-18.28, -1.02%)
  • Nasdaq: 4,051.43 (-46.53, -1.14%)

And now the top stories:

  • The Federal Open Market Committee announced its final monetary policy decision under outgoing Fed Chairman Ben Bernanke. The FOMC reduced its monthly purchasing program by $10 billion to $65 billion, in line with economist expectations. It also didn’t change its forward guidance on short-term rates. Markets, which were already down, slid a bit after the announcement.
  • Wall Street analysts then reacted to the news. “From the viewpoint of domestic U.S. economic conditions the Statement is completely anodyne,” Citi’s Steven Englander wrote clients. “From the point of view of EM, the Fed has just said ‘hasta la vista, baby’. The comment on U.S. growth was a not surprising upgrade in the growth assessment – economic activity ‘picked up’ rather than ‘is expanding at a moderate pace’, but very little else changed other than the expected $10 billion additional tapering.”
  • Completed foreclosures dropped 24% in 2013 from 2012, according to new data from CoreLogic. “The decline indicates that the distressed foreclosure inventory is healing at an accelerating rate heading into 2014,” CoreLogic chief economist Mark Fleming said.
  • The South African rand plummeted after the country’s central bank unexpectedly hiked rates today at their monthly policy meeting. The SARB raised its benchmark rate 50 basis points to 5.50%. “Across EM, markets have been caught in a storm of portfolio outflows as the Federal Reserve begins winding down its quantitative easing program, reducing dollar liquidity in worldwide,” writes our Matthew Boesler.
  • The Turkish lira soared after a massive rate hike by Turkey’s central bank on Tuesday, but later gave up its gains.
  • Bitcoin has been pretty steady as of late. “Starting in October, Bitcoin began experiencing almost violent price swings, driven largely by a run-up — and just as soon, a free fall — in Chinese demand,” explains our Rob Wile. “But Bitcoin price charts show volatility has seriously deflated in January. And that’s despite numerous negative opinions on the digital currency from Malaysia, Russia, and the world’s largest Nordic foreign currency trader — and despite the arrest this week of a major Bitcoin player.”
  • Facebook reported Q4 2013 earnings after the bell. The company posted $2.59 billion in revenue and an EPS of $0.31, beating Wall Street expectations. Shares popped up 6% in after hours trading.

DON’T MISS: Here’s Your 20-Second Guide To What Aussie Traders Will Be Talking About This Morning »

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