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Stocks slump to worst day in three months in wake of Fed statement

The Dow Jones Industrial Average fell 633.87 points, or 2.05%, to 30,303.17, the S&P 500 lost 98.85 points, or 2.57%, to 3,750.77 and the Nasdaq Composite dropped 355.47 points, or 2.61%, to 13,270.60.

January 28, 2021 / 07:43 AM IST

US stocks suffered their biggest one-day percentage drop in three months on Wednesday, adding to losses after the latest Fed statement as major indexes were also pressured by a slump in Boeing and a selling of long positions by hedge funds.

Shares of videogame retailer GameStop Corp and movie theater operator AMC Entertainment Holdings Inc each more than doubled on Wednesday, continuing a torrid run higher over the past week, as amateur investors again piled into the stocks, forcing short-sellers such as Citron and Melvin to abandon their losing bets.

“It’s a dangerous game to play from both sides of the spectrum, whether you’re long or short,” said Matthew Keator, managing partner in the Keator Group, a wealth management firm in Lenox, Massachusetts. “You get close enough to the fire you’re going to get burned.”

After briefly paring losses, declines accelerated in the wake of the policy statement from the Federal Reserve. The central bank kept overnight interest rate near zero and made no change to its monthly bond purchases, as was widely expected, and pledged to keep that support intact until a full economic rebound is in place.