NEW YORK Weak reports on hiring and service industries sent stocks lower Wednesday, but investors seemed unnerved in the last hour of trading after Federal Reserve Governor John Williams suggested that the central bank may begin to back off its monetary stimulus program as early as this summer.
The Dow Jones industrial average on Wednesday fell 98 points, or 0.7 percent, to 14,561. The Standard & Poor's 500 index dropped 15 points, or 1 percent, to 1,554. Both indexes closed at record highs the day before.
Williams said in a speech in Los Angeles that the Fed in the next months could start to wind down its policy of "quantitative easing," a program in which the central bank aims to stimulate economic growth by purchasing $85 billion in Treasuries and mortgage-backed securities a month.
"An important rule in both forecasting and policymaking is not to overreact to what may turn out to be just a blip in the data," Williams said. "But, assuming my economic forecast holds true, I expect we will meet the test for substantial improvement in the outlook for the labor market by this summer. If that happens, we could start tapering our purchases then. If all goes as hoped, we could end the purchase program sometime late this year."
Among stocks making big moves:
- Zynga (ZNGA) rose 46 cents, or 15 percent, to $3.53 after the online game maker said two casino games would debut in the United Kingdom Wednesday.
- Abercrombie & Fitch (ANF) rose $1.74, or 4 percent, to $47.20, making it the biggest percentage gainer in the S&P 500, after the company said late Tuesday that it planned to expand internationally and place greater emphasis on cost control.