Dow now at 10,716, down 44 points.
NEW YORK (AP) — Traders put their September stock rally on hold
and moved into Treasurys and gold Wednesday, a day after the
Federal Reserve said it was ready to take more action to boost the
economy.
The Dow Jones industrial average fell about 34 points in afternoon
trading.
With no new economic data out Wednesday and the Fed’s announcement
late Tuesday having a bigger impact on the bond and currency
markets, Bob Auer, portfolio manager of the Auer Growth Fund, said
it was natural for stocks to pause.
Major indexes have been on a tear this month as economic reports
have consistently indicated the economy continues to grow slowly.
The affirmation of any growth has been enough to propel stocks
higher.
“People are saying, ‘I’ve got some profits, let’s book ‘em,”’ Auer
said. Entering Wednesday, the Dow had risen 13 of the past 15 days
and climbed 7.5 percent in September.
The Fed didn’t announce specific actions to strengthen the economy,
but investors interpreted its statement as a signal that the
central bank could step up its bond-purchasing program down the
line. The Fed said the economy is still recovering but at a
sluggish pace.
Investors had little incentive to move more money into stocks, so
they turned their focus to bonds and gold. Treasurys rose again,
pushing their yields lower, and gold climbed to another record.
If the Fed starts purchasing bonds, it would have the dual effect
of raising demand for Treasurys and hurting the value of the
dollar. That’s why bond prices rallied Wednesday and traders
swapped out dollars for gold and other currencies.
The Dow fell 33.86, or 0.3 percent, to 10,727.24 in afternoon
trading.
