
BY BERNARD CONDON
AP BUSINESS WRITER
NEW YORK (AP) — U.S. stocks dropped in early afternoon trading Friday a day after the Federal Reserve held off raising interest rates. Investors interpreted the Fed’s decision as a signal that the global economy is weak. Bonds rose and the price of oil fell, pushing down energy stocks. Financial stocks, which would benefit from higher rates, also dropped.
KEEPING SCORE: The Dow Jones industrial average dropped 254 points, or 1.5 percent, to 16,419 as of 2:17 p.m. Eastern time. The Standard & Poor’s 500 fell 25 points, or 1.5 percent, to 1,964 and the Nasdaq composite declined 55 points, or 1.1 percent, to 4,838.
THE FED: The Federal Reserve decided Thursday to keep interest rates at record lows, citing low inflation, weakness in the global economy and unsettled financial markets. Investors appear to have interpreted the decision to mean that the Fed thinks the slowdown in China and other emerging markets is signaling a much weaker global economy. Some economists and investors had predicted that Fed policymakers would lift rates by a quarter of a percentage point. The Fed meets again next month and in December.
THE QUOTE: “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?” said Bill Strazzullo, chief strategist at market research firm Bell Curve Trading.