US stocks skid after Fed keeps zero rate

NEW YORK (AFP) - Wall Street stocks tumbled in early trade Friday, joining leading European bourses in retreating a day after the US Federal Reserve kept its benchmark interest rate at zero.

About 35 minutes into trade, the Dow Jones Industrial Average was at 16,428.18, down 246.56 points (1.48 per cent).

The broad-based S&P 500 fell 23.54 (1.18 per cent) to 1,966.66, while the tech-rich Nasdaq Composite Index dropped 46.28 (0.95 per cent) to 4,847.67.

The Fed on Thursday, following a two-day policy meeting, opted against pulling the trigger on the first rate hike in nine years.

The US central bank cited concerns about global growth, with Chair Janet Yellen expressing worries about "a risk of a more abrupt slowdown than most analysts expect." Most Asian equity markets advanced Friday in relief, as a rate hike would have drawn investment funds from their countries to seek higher returns in the United States. But European bourses tumbled, with Paris and Frankfurt down more than three per cent.

The decision means uncertainty over US monetary policy will continue to dog financial markets.

"What that should ensure is that the roller-coaster ride the capital markets have been on since August will keep going, twisting and turning, and perhaps throwing riders for a loop occasionally, with incoming data points and inter-meeting speeches from Fed officials," said analyst Patrick O'Hare.

Banking stocks fell sharply, with Citigroup, Wells Fargo and JPMorgan Chase all losing about 2.5 per cent.

Software company Adobe Systems jumped 3.8 per cent after third-quarter profit more than tripled to $174.5 million.

Texas Instruments advanced 0.6 per cent after announcing it would lift its dividend by 12 per cent and had authorized an additional $7.5 billion in stock repurchases.

Hotel chain La Quinta Holdings sank 15.4 per cent after announcing that Wayne Goldberg would step down as chief executive. The board appointed chief financial officer Keith Cline interim CEO.

Bond prices rose. The yield on the 10-year US Treasury fell to 2.16 per cent from 2.20 per cent Thursday, while the 30-year dropped to 2.97 per cent from 3.01 per cent. Bond prices and yields move inversely.