Business

US markets recover after Fed swoon

NYSE traders Image copyright Reuters

US stocks fell after the Federal Reserve said it would start to trim bond holdings in October, but they pared losses by the end of Wednesday.

Apple weighed on the tech-focused Nasdaq index, which fell 5.28 points or 0.08% to 6,456.04.

But the other two main indexes continued an upward climb.

The Dow Jones rose 41.79 points or 0.19% to 22,412.59. The wider S&P 500 closed at 2,508.24, up 1.59 points or 0.06%.

US stocks have been on a winning streak this year.

Federal Reserve Chair Janet Yellen said that rise was one of many factors informing the bank's decision to begin shedding the bond holdings acquired to boost the US economy after the financial crisis.

The bank also signalled the possibility of another interest rate hike before the end of the year, though it kept rates unchanged for now.

But she said it's not clear how to interpret the share price gains. She said one theory is that investors have started to price in the likelihood that interest rates will remain low by historic standards for some time, even with the Fed taking action to remove economic stimulus.

Individual companies also shaped markets on Wednesday.

Pfizer was among the Dow's top gainers, adding 1.5%, after the firm said it had filed a lawsuit against Johnson & Johnson, accusing it of anti-competitive behaviour aimed at defending its rheumatoid arthritis drug Remicade.

Johnson & Johnson sank, shedding 1.48%.

Shares in General Mills fell by 5.8% after its quarterly profit missed estimates, hurt by lower sales of its yogurts and cereals in North America.

The company's net sales fell 3.5 percent to $3.77bn. It reported profits of $404.7m for the three months that ended 27 August.