Fed Inaction Extends Market Volatilty, S&P 500 Index Drops 1.6%

Nichole Harper
18 Sep, 2015
New York City

Stock indexes and bond yields declined after the latest Fed inaction failed to remove a layer of uncertainty. Fed worried that the slowdown in China and emerging markets and volatile financial markets may affect domestic economy but showed willingness to a modest tightening before the year-end.

[R]4:35 PM New York City, New York – Stock market indexes and bond yields declined after the latest Fed inaction failed to remove a layer of uncertainty. Fed worried that the slowdown in China and emerging markets and volatile financial markets may affect domestic economy but showed willingness to a modest tightening before the year-end.][/R]

Stocks on Wall Street turned lower on the final trading day of the week as investors worried that the rate uncertainty may continue till the year-end.

U.S. bond yields continued to decline after the latest Fed inaction and 10-year U.S. Treasury yield dropped to a week-and-a-half low of 2.13%. Yield on five-year bond declined to a three-week low of 1.43%.

Market indexes steadily declined and the widely followed indexes dropped between 1.4% and 1.6% in New York.

On Wall Street, Tollbooth Strategy Index slipped 58.36 or 0.6% to 10,433.60.

S&P 500 index dropped 32.51 or 1.6% to 1,958.08 and the Nasdaq Composite Index slumped 66.71 or 1.4% to 4,827.23.

Crude oil in New York decreased $1.93 to $44.94 a barrel and gold soared $21 to $1,138.10 an ounce.

U.S. Movers

Adobe Systems Inc ((ADBE)) jumped 3.3% or $2.64 to $82.95 after the software company reported total revenues in the third-quarter ending on August 28 surged 22% from a year ago to $1.22 billion.

Net income in the quarter soared to $174.5 million or 34 cents per diluted share compared to $44.7 million or 9 cents from the same quarter last year.

Adobe forecasted revenues for the fourth-quarter between $1.275 billion and $1.325 billion and earnings per share in the range of 32 cents to 38 cents.

Equifax Inc. ((EFX)) slipped 33 cents to $98.03 after the outsourcing services provider made non-binding proposal to acquire Australia-based data analysis provider Veda Group Limited for $2.70 per share in cash valued at about $2.3 billion or US$1.6 billion.

The transaction representing 35% premium of yesterday’s closing price of $1.995.

European Markets

In London trading, FTSE 100 index slipped 76.86 or 1.2% to 6,110.13 and in Frankfurt the DAX index slumped 303.61 or 2.9% to 9,930.63.

In Paris, CAC 40 index declined 131.63 or 2.8% to 4,525.78.

For the week, FTSE 100 index slid 0.1% and the DAX index dropped 2% and the CAC 40 index slipped 0.5%.

Deutsche Bank AG declined 4.2% to €25.25 after the Germany-based bank said it will close its corporate banking and security operations in Russia and it will now operate from international hubs.

As the bank''s new co-chief executive, John Cryan, looks to reshape its business and said its other operations in Russia will remain as it is.

Worldpay Group Plc, the U.K.-based payment processor plans to launch an initial public offering to raise £890 million or about $1.4 billion on London Stock Exchange in next month and expected to sell about 25% of its shares in the offering.

The company owned by the private equity firms Advent International and Bain Capital.

Worldpay reported net revenue in the first-half ending in June of £465.7 million and for fiscal 2014 net revenue of £863.4 million.

Asian Markets

Investors’ hopes were dashed after the U.S. Fed held out for a possible rate before the year’s end but did not provide any more specific time frame.

World markets have been volatile for the last six week ahead of the rate decision but the latest Fed action failed to remove a layer of uncertainty and now the focus has shifted to the next meeting scheduled in the last week of October

Stocks in Tokyo fell sharply after the U.S. Fed held rates as expected but failed to remove a layer of uncertainty and held out for a possible rate hike at one of the two scheduled meeting in the rest of the year.

Market averages in Tokyo closed lower after the U.S. Fed held rates as expected but the central bank cautioned rates are likely to rise before the end of the year.

However, market uncertainty is likely to continue for several weeks as investors shifted focus to the next meeting in late October.

The Nikkei 225 Stock Average slumped 362.06 or 1.9% to 18,070.21 and the broader Topix index dropped 29.53 or 1.9% to 1,462.38.

For the week, Nikkei 225 decreased 0.9%.

The yen strengthened to 119.45 against a dollar.

Oracle Corporation Japan dropped 2.3% to 4,690 yen after the business applications developer reported revenues in the first-quarter ending in August jumped 2.6% from a year ago to 37.57 billion yen.

Net income in the quarter surged 12.6% to 7.48 billion yen compared to 6.64 billion yen and diluted earnings per share increased to 58 yen from 52 yen in the same period a year ago.

The company forecasted revenues for the year to jump between 2% to 5% and earnings per share in the range of 245 yen to 254 yen.


Sensex rebounds and looks beyond hoopla surrounding Fed induced uncertainty. Power Grid Corp received approval from shareholder to raise up to $2 billion. Ultratech Cement received an approval from the Environment Ministry to expand production capacity in Maharasthra.

Stocks in Mumbai looked ahead after the U.S. Federal Reserve held rates as expected and focused on the domestic corporate news.

Rupee strengthened 79 paisa to 65.67 against one U.S. dollar.

The Sensex Index advanced 254.94 or 0.9% to close at 26,218.91. The CNX Nifty increased 82.75 or 1.1% to 7,981.90.

For the week, Sensex Index and CNX Nifty soared 2%.