Federal Reserve Chair Janet Yellen’s Washington, D.C., news conference is on a television screen behind specialist Gernaro Saporito as he works at his post on the floor of the New York Stock Exchange on Wednesday, March 19, 2014. US stocks dropped after Yellen offered a rough time-table for when the central bank could raise benchmark interest rates. AP
NEW YORK—US stocks dropped after Federal Reserve Chair Janet Yellen offered a rough time-table for when the central bank could raise benchmark interest rates.
At the closing bell, the Dow Jones Industrial Average slid 113.12 points (0.69 percent) to 16,223.07.
The broad-based S&P 500 fell 11.41 (0.61 percent) to 1,860.84, while the tech-rich Nasdaq Composite Index declined 25.71 (0.59 percent) to 4,307.60.
Stocks did not move significantly after the Fed’s initial policy announcement at 1800 GMT, which, as expected, continued a plan to trim back stimulus.
But a remark from Yellen during a news conference rattled markets, sending the Dow as low as 16,336.19 before stocks pared losses.
Yellen said the time-frame for raising interest rates could be “on the order of around six months” after the stimulus ends.
Michael James, managing director of equity trading at Wedbush Securities, said the time-frame suggested the shift from an era of extremely low rates would come “sooner than the market had been expecting.”
But Hugh Johnson of Hugh Johnson Advisors said the market misinterpreted the remark.
“The knee-jerk response of the markets was an overreaction,” Johnson said.
The sell-off eased when markets concluded “that she didn’t say anything that was significantly different from what the market expected,” Johnson said.