U.S. stocks drop slightly as Fed ends QE

U.S. stocks dropped slightly Wednesday as the Federal Reserve announced to end its quantitative easing (QE) stimulus program.

The Dow Jones Industrial Average lost 31.44 points, or 0.18 percent, to 16,974.31, recovering from a drop of 110 points immediately after the release of the Fed decision. The S&P 500 was down 2.75 points, or 0.14 percent, to 1,982.30. The Nasdaq Composite Index underperformed the other two major indices, down 15.07 points, or 0.33 percent, to 4,549.23.

The Federal Reserve said Wednesday that it decides to end its monthly asset purchase program, as it "continues to see sufficient underlying strength in the broader economy to support ongoing progress toward maximum employment in a context of price stability. "

U.S. stocks drifted near flatline for most of the session, and then fell to session lows immediately after the decision was announced, as the central bank's brighter view toward the economy was taken as a hawkish sign that it may raise interest rate sooner than expected.

"On balance, a range of labor market indicators suggests that underutilization of labor resources is gradually diminishing," the Fed said in the statement after its two-day meeting.

The expression was different from "significant underutilization " of labor resources in the minutes of its September meeting.

However, U.S. stocks eased part of losses heading into the closing bell, as the Fed retained the language of keeping the federal funds rate low for a "considerable time" after the end of its asset purchases program. Analysts expected the Fed to begin raising rates around mid-2015.

The Fed's quantitative easing has been a major catalyst that propped up the U.S. equity market to record highs while expanding its balance sheet dramatically.

Facebook shares fell 6.08 percent, weighing down the tech-heavy Nasdaq, after the social networking company late Tuesday released better-than-expected earnings and revenue for the third quarter, but warned of a spike in spending next year related to its acquisition plans.

After Wednesday's closing bell, Visa reported adjusted quarterly earnings of 2.18 dollars per share on revenue of 3.2 billion dollars, both above market forecast. Shares of the card company rose in after-hours trading.

With 57 percent of the S&P 500 companies having reported third- quarter results, 75.3 percent of the firms have released earnings above analyst expectations, and 59.1 percent of them reported revenue above forecast, according to latest data from Thomson Reuters.

The CBOE Volatility Index, often referred to as Wall Street's fear gauge, added 5.28 percent to end at 15.15.

In other markets, the dollar rose against other major currencies, as the Fed's decision to end QE this month spurred market expectation that raising interest rates may be on the Fed's agenda next year.

In late New York trading, the euro decreased to 1.2646 dollars from 1.2736 dollars in the previous session. The greenback bought 108.79 Japanese yen, higher than 108.08 yen of the previous session.

Crude prices advanced as government report showed that U.S. inventories increased less than expected.

Light, sweet crude for December delivery moved up 78 cents to settle at 82.2 dollars a barrel on the New York Mercantile Exchange.

Gold futures on the COMEX division of the New York Mercantile Exchange fell sharply, after the Fed announced the end of its bond- purchasing program, cutting demand for the precious metal as safe- haven asset.