Fed's Policy a Downer for the Market

On Wednesday, the market opened down ahead of the Fed's policy statement on its bond-buying program. The Fed reported it would decrease bond buying by another $10 billion, after which the market hit a new daily low and closed down for the day. At the close, the Nasdaq lost -46 points (-1.14%) and the S&P 500 slipped -18 points (-1.02%). The Russell 2000 (small caps) fared the worst, declining -1.39% to close at 1,122.

Today, the market closed at or near Monday's lows (retest of the low) and did not fall further. However, both the S&P and Nasdaq have now closed down on 4 out of the last 5 days. Moreover, the S&P has closed below its 50 EMA on 3 out of the last 4 days. So far, the market has corrected -4%. 

Volume was increased for all three major indices today, representing another day of selling by institutional investors. Decliners led advanced by a 3 to 1 ratio, and down volume beat up volume by 4 to 1. There are more economic reports due tomorrow, including weekly jobless claims, 4th quarter GDP, and December Pending Home Sales. In addition, more earnings reports will be reported tomorrow which may lead to continued volatility.