Politics & MoneyInvestments

HW 30 declines after Fed minutes, JPM settlement

Fed suggests tapering is right around the corner

The HW 30 finished down 0.58% Wednesday after the Federal Reserve sent a slightly more hawkish message after deciding to continue its purchase of mortgage-backed securities and Treasurys for now.

What evidently disrupted the market was an ambiguous statement in which the Fed indicated a taper could be implemented even if the Federal Open Market Committee members haven’t reached all of their stated economic goals.

The Fed has consistently linked ongoing tapering to a need to stimulate enough growth to massage a nascent housing recovery while simultaneously attempting to push the unemployment rate to a benchmark of at least 6.5%.

Per the Fed meeting minutes, participants "also considered scenarios under which it might, at some stage, be appropriate to begin to wind down the program before an unambiguous further improvement in the outlook was apparent."

All the major stock indices finished down – the Dow Jones declined 0.41%; while the Nasdaq and the S&P 500 ticked down 0.26% and 0.36%, respectively.

One of the more noted movers – JPMorgan Chase (JPM) – inched down, closing 0.09% lower. While the stock's dip is only a slight one, analysts spent Wednesday reacting to news of JPM's massive $13 billion settlement with the Justice Department.

"I don’t think they are reacting to the settlement per say," said Nancy Bush, bank analyst with NAB Research LLC. "It’s down only modestly."

But she says there is now some uncertainty surrounding the stock.

The settlement didn’t resolve everything for JPM, and she views remaining litigation as a potential impediment going forward.

“We would have hoped that the $13 billion (settlement) would have added certainty, and in some regards it did,” she said. But the analyst added, JPM signed a statement of fact outlining some of the issues it had with mortgage-backed securities during the underwriting process.

"There is a concern that the statement of fact which alleges some nasty things will open the doors to class action lawsuits," she explained. "It will be red meat in front of the plaintiffs lawyers."

Despite the risk, the stock fell only slightly on Wednesday.

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