March 19 - Summary: Federal Reserve Chair Janet Yellen hints at earlier than expected rate hike slam markets; Oracle, Fedex results disappoint; Toyota's $1.2b settlement. Bobbi Rebell reports.
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Federal Reserve Chair Janet Yellen delivered a blow to the financial markets saying a rate hike could come as soon as six months after the monetary stimulus ends this fall. That is a more aggressive path than many had anticipated.
Investors- caught off guard - sold off stocks- sending the markets lower for the first time in three days.
All the major indexes fell by more than half a percent.
The comments came as the Fed wrapped up its two-day policy meeting-Janet Yellen's first. While the statement said rates would stay low even after the job market returned to full strength and inflation rose to the central bank's target- comments by Janet Yellen rocked the boat when she indicated rates would likely rise much earlier than many had expected.
SOUNDBITE: JANET YELLEN, CHAIR OF THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM (ENGLISH) SPEAKING:
"The committee continues to anticipate the conditions will likely warrant maintaining the current range for the Fed Funds rate for a considerable time after the asset purchase program ends."
She added that a considerable period is probably around six months.
To better guide expectations, the Fed dropped the unemployment rate as a threshold and will now include a wide range of economic indicators. As expected, the bank cut its monthly asset purchases by $10 billion to $55 billion.
In corporate earnings, Oracle's disappointing results were a drag on its stock- hurt by slow IT spending and competition from smaller rivals.
Winter storms kept down shipping volumes and ran up costs at FedEx- hurting profits. The company also slashed profit forecasts for the year.
In other news...
Toyota admitted it lied about two safety issues- and now will pay a record $1.2 billion - ending a four-year criminal investigation by the U.S. Justice Department.
In Europe, investors were worried that the conflict in Crimea could escalate, but on Wednesday they laid low awaiting a further cut in U.S. monetary stimulus.
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