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Fed exit fears rattle Wall Street

Fed exit fears rattle Wall Street
Thursday, June 20, 2013 - 7:59am

Investors around the world continued to be spooked by Federal Reserve chairman Ben Bernanke's comments about a potential exit strategy later this year.

The Dow Jones industrial average tumbled 140 points, or 0.9%, at Thursday's opening bell. The S&P 500 sank 1% and the Nasdaq fell 1.1%.

"We have the Fed show weighing heavily on the markets," said Peter Cardillo, chief market economist for Rockwell Global Capital.

Bond yields continued to spike Thursday, with the 10-year Treasury yield rising as high as 2.45%. That's its highest level since August 2011. At the same time, gold prices plunged and the dollar rallied against the euro and the yen.

World stock markets were also deeply in the red.

A weak reading on China's factories further rattled investors as it stoked concerns about slowing growth in the world's second biggest economy.

Major European markets fell by more than 2% in morning trading. Asian markets also saw hefty losses after HSBC's flash purchasing managers' index for June showed Chinese manufacturing activity at a 9-month low. Hong Kong's Hang Seng and the Shanghei Composite both shed nearly 3%.

Stocks sank Wednesday after Bernanke said the central bank could slow the pace of its bond-buying program later this year if the economy continues to improve.

Bernanke stressed that these plans will be adjusted if the recovery doesn't continue as expected, but that was no comfort to investors. The Dow and S&P 500 tumbled 1.4%.

Cardillo said Friday's impending expiration of futures and options contracts, known as quadruple witching, is also weighing heavily on stocks.

Thursday morning, the government said the number of jobless claims rose more than expected in the latest week. Meanwhile, the National Association of Realtors will publish its monthly report on existing home sales at 10 a.m. ET. The Philadelphia Fed report is also scheduled for 10.

On the corporate front, drugstore chain Rite Aid swung to a profit but revenue declined in the latest quarter.

Tech giant Oracle is up in the afternoon.

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