Dow, S&P 500 fall as Fed keeps rates at zero

NEW YORK (AFP) - The Dow and S&P 500 fell Thursday while the Nasdaq advanced slightly in a choppy session after the Federal Reserve kept interest rates at zero.

The Dow Jones Industrial Average shed 65.21 points (0.39 per cent) to 16,674.74.

The broad-based S&P 500 fell 5.11 (0.26 per cent) to 1,990.20, while the tech-rich Nasdaq Composite Index added 4.71 (0.1 per cent) at 4,893.95.

Markets lurched in both directions at times after the Fed's 1800 GMT (2am Friday Singapore time) policy announcement, with the S&P 500 jumping above 2,020 at one point before retreating again.

The Fed, following a two-day policy meeting, left its federal funds rate unchanged at zero-0.25 per cent, opting against the first increase in nine years.

While the Fed expressed confidence in the US recovery, it cited concern about overseas conditions.


Large banks fell, with Dow member JPMorgan Chase losing 2.3 per cent, Bank of America dropping 2.9 per cent and Wells Fargo dropping 2.8 per cent. Bank profits were expected to get a lift from a hike in interest rates.

Homebuilder stocks advanced, including Lennar (+1.3 per cent), KB Home (+2.2 per cent) and DR Horton (+1.8 per cent).

General Motors rose 0.4 per cent as US prosectors announced a criminal fine of US$900 million (S$1.2 billion) over the automaker's failure to disclose a deadly ignition defect to regulators.

The government agreed not to seek a conviction in exchange for the fine and the appointment of an independent monitor at the company.

Cablevision Systems bolted 13.9 per cent higher on news it would be acquired by Luxembourg-based media giant Altice for US$17.7 billion.

Drugmaker Eli Lilly jumped 6.6 per cent after releasing research showing its Jardiance medicine for diabetes reduced the risk of cardiovascular-related death.

Amazon rose 2.2 per cent as it unveiled a US$50 tablet computer and other devices aimed at budget-conscious, gadget-hungry consumers.

Technology giant Oracle fell 4 per cent after reporting that first-quarter earnings dropped 19.7 per cent to US$1.75 billion. Oracle cited the strong dollar as a drag on results.

Drugstore chain Rite Aid sank 10.8 per cent after second-quarter net income came in at two cents per share, two cents below analyst forecasts.

Bond prices jumped. The yield on the 10-year US Treasury fell to 2.2 per cent from 2.3 per cent Wednesday, while the 30-year dropped to 3.01 per cent from 3.08 per cent. Bond prices and yields move inversely.