Stocks close lower as Fed confirms Q1 economic stall
U.S. stocks closed lower on Wednesday after the government data showed even more tepid economic growth in the first quarter and the Federal Reserve held benchmark rates at historic lows.
The Dow Jones industrials (DJI) fell 75 points, or 0.4 percent, to finish at 18,036. The S&P 500 (SPX) shed 8 points, or 0.4 percent, ending at 2,108. And the Nasdaq Composite (COMP) was off 32 points, or 0.6 percent, to close at 5,024.
Central bankers unanimously voted to keep rates close to zero, with the Federal Open Market Committee (FOMC) statement doing little to sway thinking that the first rate hike would likely come in September.
The impact of the Fed's monetary decisions on the economy comes down to how the bond and currency markets react, said Paul Ashworth, chief U.S. economist at Capital Economics.
"The Fed is doing everything it can to make sure the response is muted. They have been trying to stress this is going to be a slow and gradual process, but they can't control what happens with long-term rates," Ashworth said.
The Fed's release follows a report from the Commerce Department that had U.S. gross domestic product increasing at a 0.2 percent annualized rate in the first quarter, after rising 2.2 percent the previous quarter.
The estimate of first-quarter GDP was "a disappointing read, and worse than expected, but we entirely expect a lot of the demand for goods and services not present in first quarter gets pulled into the second," Art Hogan, director of research and chief market strategist at Wunderlich Securities told CBS MoneyWatch.
"More than a couple of household names had disappointing results," said Hogan, listing Twitter (TWTR, down 9 percent, or $3.78, at $38.49), Wynn Resorts (WYNN, down 17 percent, or $21.71, to $108.77) and Buffalo Wild Wings (BWLD, down 12.8 percent, or $23.45, to $160.25 ) as among the corporations releasing quarterly earnings that weighed on sentiment.