QE3 Ends, Pressuring Dow Jones Industrial Average

The Fed is ending quantitative easing, but will keep interest rates low

by Alex Eppstein

Published on Oct 29, 2014 at 4:18 PM
Updated on Apr 20, 2015 at 5:32 PM

After spending much of the day around breakeven, the Dow Jones Industrial Average (DJI) tumbled on the Federal Reserve's decision to end its monthly bond-buying program -- despite the move being widely expected. Following a brief period of volatility, however, the blue-chip index partially recovered to end with a modest loss -- but still finished below the critical 17,000 mark. Meanwhile, the S&P 500 Index (SPX) and Nasdaq Composite (COMP) suffered their own minor setbacks. It was an interesting day for social media names, too, as Facebook Inc (NASDAQ:FB) got hammered by a round of bearish brokerage notes in the wake of its third-quarter earnings report, while sector peer Twitter Inc (NYSE:TWTR) continued to spiral lower.

Continue reading for more on today's market, including:

  • International Business Machines Corp. (NYSE:IBM) moved little after announcing a deal with TWTR, but call buyers nonetheless wagered on end-of-week gains.
  • Hewlett-Packard Company's (NYSE:HPQ) entry into the 3-D printing space took a toll on Stratasys, Ltd. (NASDAQ:SSYS), luring short- and long-term option bears to the table.
  • Should contrarians be worried about the waning interest in CBOE Volatility Index (VIX) call options?
  • Plus ... More on the end of quantitative easing (QE), CurrentC gets hacked, and a decade-plus low for Barrick Gold Corporation (USA) (NYSE:ABX).

The Dow Jones Industrial Average (DJI - 16,974.31) was up by as many as 60 points, but ended 31.4 points, or 0.2%, lower -- and back below 17,000 -- following the aforementioned policy update from the Fed. Fourteen of the Dow's 30 components ended in the green, led by Pfizer Inc. (NYSE:PFE), which advanced 1.4%. The other 16 blue-chip stocks finished below breakeven, paced by a 1.7% loss at DuPont (NYSE:DD).

The S&P 500 Index (SPX - 1,982.30) gave back 2.8 points, or 0.1%, while the Nasdaq Composite (COMP - 4,549.23) lost 15.1 points, or 0.3%.

The CBOE Volatility Index (VIX - 15.15) picked up 0.8 point, or 5.3%, to close back above 15.

CLOSING SUMMARY – INDICES

CLOSING SUMMARY – NYSE AND NASDAQ

5 Items on Our Radar Today:

  1. As expected, the Federal Reserve decided to end its QE3 program during its most recent policy-setting meeting. Nevertheless, the highly anticipated statement from the Federal Open Market Committee (FOMC) promised to keep interest rates low for a "considerable period of time," until the central bank sees further improvements in the economy. Nine of the 10 voting FOMC members approved the statement, with Minneapolis Fed President Narayana Kocherlakota -- an advocate of continued QE -- being the lone dissenter. (CNBC)
  2. CurrentC -- a rival of Apple Inc.'s (NASDAQ:AAPL) new Apple Pay system, created by the Merchant Customer Exchange (MCX) -- confirmed hackers stole the email addresses of test users. "We take the security of our users' information extremely seriously," said MCX spokesperson Linda Walsh. "MCX is continuing to investigate this situation and will provide updates as necessary." (USA Today)
  3. The gold producer that skidded to a 14-year low.
  4. Cliffs Natural Resources Inc (NYSE:CLF) made another big move in the wake of several analyst updates.
  5. Downwardly revised earnings guidance put the hurt on this carbohydrate king.
EARNINGS

For a look at today's options movers and commodities activity, head to page 2.

STOCKS – NOTABLE CALL ACTIVITY

STOCKS – NOTABLE PUT ACTIVITY

Commodities:

December-dated crude edged higher, after the Energy Information Administration (EIA) said growth in domestic inventories slowed last week. By the close, crude was up 78 cents, or 1%, at $82.20 per barrel.

Gold futures ended lower today, as traders reacted to the conclusion of QE3. By session's end, December-dated gold was down $4.50, or 0.4%, to settle at $1,224.90 per ounce.


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