Market Summary

Wall Street jumped sharply after the 2:15 fed statement after being quiet during the morning session. However, stocks reversed direction in a hurry to close at their lowest levels of the session. After crossing the 9,900 barrier, the blue chips closed down 81.32 points, or 0.83 percent, to 9,748.55. The Standard & Poor’s 500 Index declined 10.79 points, or 1.01 percent, to 1,060.87. The Nasdaq Composite Index lost 14.88 points, or 0.69 percent, to 2,131.42.

The fear of the fed’s withdrawal of stimulus following a near 60% run up in the market will definitely lead to second thought as to whether new money will be put to work.

Crude Tumbles on Inventory Gains

U.S. crude futures tumbled more than 4 percent to below $69 a barrel on Wednesday after government data showed surprisingly large weekly increases in domestic crude oil and refined product supplies. Light, sweet crude oil for November delivery on the NYMEX settled down 3.9%, or $2.79 lower, at $68.97 a barrel. We are in that nice lull before a cold winter picks up demand for heating oil.

Fed Clears Way to Remove Liquidity From Market

U.S. Federal Reserve officials Wednesday signaled that the economic recovery is well under way and they unveiled a clear strategy for reining in their $1.25 trillion balance sheet expansion to purchase mortgage backed securities. The Fed plans to execute their purchased by the end of Q1 in 2009.

In a 10-0 vote, the FOMC will keep their target range at 0%-0.25% for the fed funds rate. Most suspect that rates will remain at current levels at least to the conclusion of that program. In addition, the fed is on target to complete their treasury purchase program of $300 billion by the end of October.

All About the Greenback

The fed statement did little to help the cause of the dollar in the currency market; as extended low interest rates drives investors to higher yielding currencies. The dollar index which measures the dollar’s value against a basket of six other major currencies, was 0.2 percent lower at 75.981; its lowest level on over a year. The euro rose as high as $1.4842, also its strongest showing this year. The dollar fell 0.1% to 91.04 yen, reversing earlier gains.