US stocks close lower as Fed comments spook markets

The US’s stock indices closed down last night as the Fed’s proposals reversed bullish investor behaviour.


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By :  ,  Financial Analyst

The US's major stock indices closed on the back foot last night (February 20th), after comments made by the Federal Reserve (Fed) spooked the markets.

There are concerns over the duration of the central bank's stimulus measures, which have given investors a reason to trim bullish positions after a rally that took equities to considerable highs.

As such, the Fed has announced a pilot programme designed to strengthen the lender's involvement in the financial markets by buying bonds from a larger group of broker-dealers.

The one-year scheme will see the New York Fed widen its supply chain so that as many as five more dealers can compete for business, thus augmenting "operational capacity and resiliency in its monetary policy operations".

In the coming months the Fed will announce the new dealers for the programme – which is not connected to the future path of US monetary policy.

At close of play on Wall Street last night, the Dow Jones retreated by 0.7 per cent to 13927.5 points, while the Nasdaq slumped by 1.5 per cent to 3164.4 points.

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