Markets closed lower for a third day on Friday, as the US Federal Reserve eased its stance on its policy of low rates and announced it would continue to tighten its monetary policy.
The Dow Jones industrial average fell 2.2% in early trading after the central bank lowered its key interest rate target to a range of 0.25% to 0.5%.
The Standard & Poor’s 500 index fell 0.2%, with the broader US stock index falling 0.1%.
“It’s a little disappointing for markets and it’s a bit disappointing for investors because it suggests that there is a lack of confidence in the Fed’s ability to do what is needed to get us out of this recession,” said David Tepper, chief investment officer at the US-based investment bank TD Ameritrade.
“But I’m not convinced that the Fed will be able to achieve that.
It is a long shot, but we will see.”
The Dow has lost more than 3% since mid-June.
US stock indexes have fallen 4.4% since the start of the year.
The S&P 500 index is down 3.5%.
The Dow is down more than 4% since early June.
US stocks fall The US dollar has strengthened, with the greenback hitting an intraday high of 88.77 per dollar as the Federal Reserve announced a 1% rate cut.
The euro also hit an intrade high, rising to $1.0721, after the ECB lifted its key rate to 0% and other central banks eased monetary policy further in response to a rise in inflation.
The dollar has weakened, while the Japanese yen has strengthened against the greenbacks.
Markets were closed in most major European countries.
US bond yields fell after the Federal Deposit Insurance Corporation (FDIC) cut its key lending rate for banks and financial institutions to a two-month low of 0%.
“The US market has been pretty much under pressure since the Fed said it was going to start easing in March, and I don’t think they’re going to have much to look forward to,” said Craig Moffett, senior markets strategist at BMO Capital Markets in London.
The Federal Reserve’s rate decision is expected to add to pressure on the US stock market, with analysts predicting the Dow will decline 1,000 points this week.
US consumer sentiment The US economy added 227,000 jobs in April, the Commerce Department said on Friday.
The unemployment rate fell to 6.6% in April from 6.8% a month earlier, the lowest level since August 2007.
The headline unemployment rate was unchanged at 5.9%.
The unemployment ratio fell to its lowest level in six months.
The median household income in the US is now $50,038 a year higher than it was in July 2011, according to the report from the Bureau of Labor Statistics.
The US consumer price index rose 1.3% in March and is now up 2.6%.
The US inflation rate is now 2.7% and is likely to fall to 2.5%, according to data released by the Commerce department.
The Fed’s move was welcomed by investors.
The FOMC has said it will continue to monitor inflation and monetary policy in the near term to help spur economic growth.
The central bank’s policy of easing monetary policy for a gradual reduction in rates was welcomed, said Jefferies analyst Doug Gurian.
“In the medium term, it will likely continue to have a modest effect on the economy and the housing market,” he said.
The rate cut was “expected to provide some breathing room” for the economy, but there was still “a long way to go”, he said in a research note.
The yield on the 10-year Treasury note was unchanged by 0.14% at 1.9647%.
The yield was unchanged on the 30-year treasury note at 1,845 basis points.
The 25-year bond rate fell 0% to 2,073 basis points, while a 1-year government bond was unchanged 0.11% to 1,569 basis points at 1 percent.
US oil price oil is expected on Friday to rise 2.4%, and the Brent crude oil benchmark was up 1.7%.
The dollar was little changed against the yen at ¥US0.6196, down 0.7 percent on the previous session.