U.S. stocks tumble as Fed sows fear and confusion

U.S. stocks sank Friday, with the S&P 500 and the Dow Jones Industrial Average closing down for the week, as Federal Reserve’s decision to leave interest rates unchanged fueled fears about global economic growth.

The central bank cited concerns about the global economy and a lack of inflation growth in its Thursday decision to leave interest rates unchanged.

“Many are confused by the outcome of the recent Fed meeting,” said Kent Engelke, chief economic strategist at Capitol Securities Management. “Markets hate confusion and lack of clarity.”

The S&P 500 SPX, -1.62%  skidded 32.16 points, or 1.6%, to close at 1,958.08 for a weekly loss of 0.2%. All S&P 500 sectors finished lower, led by energy shares.

The Dow Jones Industrial Average DJIA, -1.74%  dropped 289.95 points, or 1.7%, to close at 16,384.79 with all 30 components in the red. The blue-chip index edged down 0.3% for the week.

The Nasdaq Composite COMP, -1.36%  shed 66.72 points, or 1.4% to 4,827.23. The tech-heavy index is the only one of the three major stock barometers to finish out the week higher with gains of 0.1%.

Trading volume was elevated, with 5.74 billion shares changing hands on the New York Stock Exchange, due to “quadruple witching,” which means the expiration of various stock-index futures, stock-index options, stock options and single-stock futures. Friday is the second highest volume day of the year.

“By not raising the rates, the Fed is now fanning global growth fears,” said Steven Wieting, global chief investment strategist, at Citi Private Bank.

“The key for future market action depends largely on whether or not the Fed had any good cause to worry about international developments,” Wieting said.

These 5 charts show why the Fed is fretting about emerging markets.

Weak oil prices and investors rotating into bonds as Treasurys rallied in wake of the Fed’s decision also pressured stocks, said Ian Winer, director of equity trading at Wedbush Securities.

October West Texas Intermediate crude CLZ5, -3.73%  skidded 4.7% to settle at $44.68 a barrel. Treasury yields fell and prices rose with the yield on the two-year Treasury note TMUBMUSD02Y, +0.63%  dropping 6.7 basis points to 0.678%. The 10-year Treasury note yield declined 5 basis points to 2.14%.

“We are not surprised to see the selloff in the market, as investors are realizing that the zero-rate policy for the past seven years has not resolved any issues in the economy,” said Bruce Bittles, chief investment strategist at R.W. Baird & Co.