Stock rally fades as investors assess Fed moves
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"After the initial euphoria surrounding the surprise announcement yesterday, there's a little more analysis of this going on and it's leading to some questions," said Todd Salamone, senior vice president of research at Schaeffer's Investment Research.
Skepticism about how long it would take for the effects of the Fed's program to take hold also weighed down shares, particularly those of banks. Investors have been hungry for any signs that confidence may finally return to battered U.S. banks, and the market has had a generally dim view of the government's efforts to date to get lending moving again.
The Dow Jones industrial average fell 85.78, or 1.2 percent, to 7,400.80.
Joe Balestrino, a portfolio manager at Federated Investors Inc., said he doesn't expect the Fed's new money-injection program will be enough on its own to support an extended stock market advance.
"We're in a very weak environment," Balestrino said. "We don't see anything sustainable here."
Stephanie Giroux, chief investment strategist at retail brokerage TD Ameritrade, said she was optimistic that the Fed's latest medicine would work, but that any rebound is likely to be "slow and muted."
Some of traders' jitters Thursday came ahead of a quarterly expiration of options contracts on Friday. The sudden settling of many of those transactions can cause a surge in trading volume and more volatility in stock prices.
