Stocks fall as Fed says Europe debt crisis impacts US growth

Other News Materials 24 June 2010 04:31 (UTC +04:00)

US stocks fell Wednesday as the Federal Reserve indicated that the eurozone's debt crisis was having an impact on US economic recovery, DPA reported.

The Fed kept interest rates at their record low of near 0 per cent on Wednesday, taking note of a continuing - but still fragile - US recovery.

The Fed noted in a statement that financial conditions had become "less supportive of economic growth on balance, largely reflecting developments abroad."

The US central bank has kept its benchmark federal funds rate at a range of 0-0.25 per cent since December 2008 to help revive the struggling economy.

"The Fed's comments are really just reflecting reality," Dan Greenhaus, chief economic strategist at Miller Tabak & Co in New York, told Bloomberg financial news.

"The economy is growing, just not as much as one would like nor as much as the previous decline would suggest. The statement is very much as we expected, reflecting the weaker growth data and the troubling inflationary data."

While the blue-chip Dow Jones Industrial Average gained 4.92 points, or 0.05 per cent, to 10,298.44, the broader Standard and Poor's 500 Index fell 3.27 points, or 0.30 per cent, to 1,092.04. The technology-heavy Nasdaq Composite Index was down 7.57 points, or 0.33 per cent, to 2,254.23.

   The US currency dropped to 81.17 euro cents from 81.5 euro cents on Tuesday. The dollar fell against the Japanese currency to 89.92 yen from 90.58 yen the previous day.