Stock markets in the U.S. and around the world were lower Friday on fears related to the Federal Reserve’s decision to leave their key interest rate at historic lows.
The Dow Jones Industrial Average closed down 290.16 points ( or 1.74%) to close at 16,384.58. The S&P 500 lost 32.16 points (or 1.6%) to 1,958.06 and the Nasdaq fell 66.72 points (1.36%) to 4,827.23 points.
Analysts were quick to say the Fed’s holding steady raises fears about the level of the U.S. economic growth and the impact that will have on the world economy.
“The market is trying to discover where it’s going next, and we have two possible paths, either we’re overwhelmed by the lack of growth and China slams into a hard landing, or China is not slowing as much as people thought,” said Wayne Lin, portfolio manager at QS Investors, told the Wall Street Journal. “What struck me about [the Fed’s statement] was the reference to what was going on globally.”
Fed Chairwoman Janet Yellen
“The situation abroad bears close watching,” Fed chair Janet Yellen said at a press conference Thursday. “Heightened concerns about growth in China and other emerging market economies have led to notable volatility in financial markets.”
“If growth in the strongest economy — the United States — isn’t strong enough to raise rates even a quarter of point, what does that say about the prospects for global growth?” Bill Strazzullo of Bell Curve Trading told the Associated Press.
The Fed mentioned low inflation, instability in the financial markets and overall global economic weakness as the driving reasons for their decision. Analysts say those fears of the Fed combined with the possibility of a government shutdown due to Planned Parenthood funding is causing some investors to flee the market for more stable investments.
World markets saw the uncertainty of the Fed impacting their trading. Germany’s DAX and Japan’s Nikkei fell 2 percent on the day. The U.S. Dollar tumbled against Asian currencies, especially the Japanese yen.
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