NEW YORK, (Reuters):
STOCKS TUMBLED yesterday after the Federal Reserve said it will hold interest rates at the lowest level since 1958 but indicated it might be closer to a rate hike. The Dow and Nasdaq stock gauges fell for the second straight session after hitting 2 1/2-year highs on Monday, erasing their gains of the last two weeks. The Fed headed by Alan Greenspan opted to hold the federal funds rate for overnight loans between banks at 1 per cent, as anticipated, but policy makers altered a pledge made in August to keep rates low for a "considerable period" and said instead they "can be patient" before implementing what would be the first rate increase since May 2000.
"I think people may use this as excuse to take some profits," said Michael Murphy, managing director at Wachovia Securities. "Up until now every time the market's tried to sell off, the buyers would appear and they'd turn the market before there was a meaningful correction."
The Dow Jones industrial average .DJI fell 141.55 points, or 1.33 percent, to 10,468.37, its biggest daily percentage loss since late October. The Standard & Poor's 500 Index .SPX was down 15.57 points, or 1.36 percent, at 1,128.48.
The technology-laced Nasdaq Composite Index .IXIC dropped 38.67 points, or 1.83 percent, to 2,077.37, notching its biggest daily percentage loss since early December.
