World stocks fall on possible Fed cut in stimulus

A share price board in Tokyo on February 21, 2013. (AFP Photo / Kazuhiro Nogi)

A share price board in Tokyo on February 21, 2013. (AFP Photo / Kazuhiro Nogi)

Markets across the globe took a knock on Wednesday amid a US squabble over continued stimulus spending, which dominated a meeting of the US Federal Reserve. The plunge has raised concerns of a recurrence of the 2008 crash.

The Dow Jones index went down by 0.8% and lost 108.13 points. The S&P 500 shed 1.2%, or 18.99 points, slipping from highs it last reached in October 2007. After closing at a 12-year high on Tuesday, the Nasdaq Composite slid by -1.53% and lost 49.19 points.

Markets had been reacting positively with better-than-anticipated earnings and a short-term US fiscal deal reached in early January.

The Wednesday dive is yet another reaction to the news from the Federal Reserve. Now the Fed might end quantitative easing the markets are worried its removal might be too broad and too fast.

However, potential changes to the Fed’s monetary policy are “less bothersome than some things on the horizon,” Art Hogan, market strategist at Lazard Capital Markets told MarketWatch.com, listing the March 1 deadline for cuts in government spending, known as sequestration, and the outcome of the upcoming Italian elections.

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