The Wall StreeT Journal reports: "' investors staged a broad retreat from risky investments, taking U.S. stocks lower, as efforts to halt a selloff in emerging-market currencies failed''.
The jitters came as traders girded for news from the Federal Reserve on whether it will stick to its plans to ratchet back its bond purchases. The U.S. central bank was scheduled to issue a statement at 2 p.m. ET Wednesday.
The Dow Jones Industrial Average was down 131 points, or 0.8%, to 15797 in recent trading. The S&P 500 index gave up 10 points, or 0.6%, to 1781, and the Nasdaq Composite Index fell 21 points, or 0.5%, to 4076.
Worries about the stability of emerging markets flared again Wednesday after interest-rate increases from central banks in Turkey and South Africa failed to halt a selloff in emerging-market currencies, stocks and debt.
Turkey's currency failed to hold gains after country's central bank took investors off guard by raising interest rates sharply late Tuesday. In recent trading, it was nearly unchanged against the dollar. The South African rand was also down, despite an increase in interest rates from that country's central bank early Wednesday. Investors fretted that the increases would take a toll on their economies and yet wouldn't be enough to stem an outflow of money.
Emerging markets have swooned in recent trading sessions, as investors fret over the outlook for the region as the Fed cuts back on its bond-buying efforts. Investors say the U.S. central bank's aggressive program, aimed at stimulating the U.S. economy, pushed investors to send cash to developing economies—taking on more risk in search of greater returns.
Investors' flight into safe havens pushed the yield on the 10-year Treasury note down to 2.724% from 2.748% late Tuesday. It sent the yen higher against the dollar as well; the greenback slid to ¥102.25 from ¥102.94 late Tuesday. Gold prices also rose 1.1% to $1264.80 a troy ounce.
Next on investors' radars Wednesday is the Fed's policy statement, the last one of Ben Bernanke's tenure as chairman of the central bank. Economists generally expect the Fed to continue to pare back on stimulus by reducing its bond-purchase program.
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