By Anora Mahmudova, MarketWatch
NEW YORK (MarketWatch) -- U.S. stocks pulled back from session
lows on Wednesday ahead of the Federal Reserve's policy decision
and after rate hikes in Turkey and South Africa failed to stem
selloffs in their currencies.
After steep drops in emerging-markets currencies last week,
several central banks acted to stop the run on their currencies.
India, Turkey and most recently South Africa raised their interest
rates. But even the big rate hike in Turkey won't stop speculators
taking the Turkish lira down, said analysts, and the lira and South
African rand dropped Wednesday.
The failure of emerging-markets central banks to stem the asset
flight has rattled U.S. stock investors, who are fearful of a
spreading global crisis and cognizant that last year's steep U.S.
equities gains aren't likely to be replicated. Read the stock
market live blog.
The S&P 500 (SPX) traded 6.7 points, or 0.4% lower at
1,785.61, erasing some of the modest gains from the previous
session. The Dow Jones Industrial Average (DJI) began the day with
triple-digit losses, but recouped some of them and traded 85
points, or 0.5% lower at 15,841.27. The Nasdaq Composite (RIXF)
fell 14.9 points, or 0.4% to 4,083.53.
Joe Bell, senior equity analyst at Schaeffer's Investment
Research said today's selling is not entirely due to the emerging
market selloffs.
"Emerging markets have been underperforming for a while now, and
since October of last year have been on the downtrend. What we are
seeing right now is a mild panic selloff triggered by fears over
emerging markets," Bell said.
"Markets have rallied too far too fast last year and are
overextended. Earnings have not been too terrible, but they have
not been great either. This consolidation is still mild given the
record levels we've reached only a few weeks ago," he added.
Investors will also focus on the Fed, which at 2 p.m. Eastern
Time is widely expected to announce a decision to trim its
bond-buying program again. Investors are also watching to see if
the Fed axes its 6.5% unemployment threshold for raising interest
rates.
A mixed bag of earnings added to pessimism on Wall Street.
Boeing (BA) reported better-than-expected fourth-quarter
earnings, as profits rose from the same period a year ago. However,
the company's outlook for 2014 was below expectations. Shares slid
4.5%.
Dow Chemical (DOW) shares jumped 3.7% after the company posted
earnings that beat estimates and said it sees positive global
economic growth in 2014.
Shares of Yahoo (YHOO) fell 6.8% after its results disappointed
late Tuesday, prompting concerns that Chief Executive Officer
Marissa Mayer still doesn't have a grip on turning around the
Internet services company.
Shares of AT&T (T) fell 2.1% in the wake of late-Tuesday
earnings.
Electronic Arts Inc. (EA) regained footing and rose 2.2% after
slipping late Tuesday on news the company cut its sales outlook on
sliding sales of games for aging consoles.
VMware Inc. (VMW) shares were off 0.4% after the virtualization
software maker reported its results late on Tuesday.
Facebook will report results after the close and is forecast to
post fourth-quarter earnings of 27 cents a share. Shares in the
social network site were down 1.3%. See our preview: Does Facebook
still have a teen problem?
In other markets, gold edged higher and oil futures dropped
ahead of U.S. crude supply data, though natural gas remained
firmer.
More must-reads from MarketWatch:
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