US consumer spending is down, manufacturing has slowed and a disappointing NFP report is expected this week, but the Federal Reserve and its Chairman, Ben S. Bernanke showed restraint in its announcement on Wednesday, fueling consumer concerns and sending Wall Street steeply downward. Though the Fed did say that it would be willing to take action if necessary, it did not present a plan for specific monetary stimulus. It did, however, confirm that the rate of inflation would run ‘at or below’ their goal of 2 percent for the personal consumption expenditures index.
The gains of last week’s rally were quickly nullified on Wednesday when the S&P 500 Index fell 0.3 percent to 1,375.32. The dollar gained slightly against the common currency, hitting $1.2226 per euro.
Trading volume was significantly above the 6.74 billion trade per day average on Wednesday, with 7.26 billion trades being placed. The market’s decline also followed a technical malfunction at Knight Capital, a market maker brokerage, which caused significant volatility shortly after the opening bell. (The company’s stock fell to a nine-year low following the glitch).
Later today ECB policymakers will be making a statement of their own, as will the Bank of England.