U.S. Markets

U.S. stocks dropped into negative territory as investors digested the Federal Reserve's gloomy assessment on the U.S. economy, adding to concerns about Apple's surprise earnings disappointment. The Dow Jones Industrial Average fell 46 points, or 0.4%, to 11530. The Standard & Poor's 500-stock index lost 12 points, or 1%, to 1213, and the Nasdaq Composite shed 44 points, or 1.7%, to 2613.

The Dow had been in positive territory prior to the release of the Fed's beige book report of economic activity around the country, but quickly sank to hit the day's lows as investors pared back risk in line with the central bank's cautiousness on the domestic economy.

[Kick off your trading day with our newsletter]

According to Canally, the Fed's report suggested to some investors that the central bank's recent attempt to stimulate the economy by buying longer term securities a shift known as Operation Twist brought limited benefits to the economy. Weighing on the markets were technology stocks, after Apple's fiscal fourth-quarter earnings and revenue fell short of expectations.

Sales of iPhones also disappointed. Apple's outlook for the fiscal first quarter, however, was above Wall Street forecasts. The stock slumped 5% after finishing at an all-time high Tuesday. Other tech names were weak, too. Hewlett-Packard lost 1.8%, and Cisco Systems fell 2.2%.

European Stock Markets

European stocks posted modest gains Wednesday, as investors remained optimistic that euro-zone officials will be able to reach a deal on resolving the region's debt crisis. The Stoxx Europe 600 index rose 0.6% to end at 236.71 after two days of losses. Nationally, London's FTSE 100 was up 0.7% at 5450.49, Frankfurt's DAX was 0.6% higher at 5913.53 and Paris's CAC-40 was 0.5% higher at 3157.34.

Late Tuesday, the U.K.'s Guardian newspaper reported that France and Germany had agreed to add EUR2 trillion to the facility. However the report was qualified by a later Dow Jones Newswires story that said European officials were still debating the size of the fund.

Still, markets continued to gain on optimism that progress was likely, with Commerzbank AG up 4.3%, Deutsche Bank AG up 4.2%, Lloyds Banking Group PLC adding 3.4% and BNP Paribas SA up 6.2%. The Stoxx Europe 600 banks index was up 2.1%, while the equivalent insurance index added 2.2%.

Investors shrugged off news that Moody's Investors Service downgraded Spain's government bond ratings to A1 from Aa2. In Madrid, the IBEX 35 index rose 0.4% to 8,849.50. European Union leaders are meeting in Brussels this weekend for a closely watched summit. In the technology sector, shares of ARM Holdings PLC and ASML Holding NV fell 1.9% and 1.2%, respectively, after Apple Inc.'s earnings missed expectations.

British Sky Broadcasting Group gained 5.1%, after the company said it added 77,000 new customers in the first quarter. Swedish telecommunications operator Tele2 AB rose 0.2%, after the company reported a third-quarter net profit that matched analysts' forecasts. Brewing giant SABMiller traded up 1%, after the company posted a rise in sales on higher volumes and agreed to a strategic alliance with peer Anadolu Efes across the Central Asia region.

Asian Stocks

Asian stocks ended mostly higher Wednesday, tracking U.S. gains Tuesday on optimism over the euro-zone bailout fund ahead of a key summit this weekend, but Apple-related plays lost ground after the company's earnings missed expectations.

Japan's Nikkei Stock Average added 0.4% in choppy trade to 8772.54, South Korea's Kospi rose 0.9% to 1855.92, Hong Kong's Hang Seng Index climbed 1.3% 18309.22, and India's Sensex rose 2% to 17085.34.

The Shanghai Composite slipped 0.3% to 2377.51. Apple-linked plays around the region dropped after the Cupertino, California-based company's fourth-quarter earnings missed analysts' expectations. In Tokyo, iPhone retailers Softbank and KDDI fell 4.1% and 3.1%, respectively.

In Taiwan, several Apple component makers ended limit-down 7%, including lens-makers Genius and Largan and touch panel maker TPK. Some regional tech plays rose after Intel's strong third-quarter sales lifted the outlook on global chip and PC markets. In Taiwan, notebook makers Quanta and Acer ended up 0.8% and 1.3% respectively. Personal-computer maker Lenovo added 2.6% in Hong Kong.

Commodities

Base metals closed mostly lower on the London Metal Exchange Wednesday amid market nervousness over a cloudy macroeconomic picture. At the close, flagship three-month copper was down 3.2% at $7,209 a metric ton. Tin stood alone in positive territory, closing the session up 2.7% at $21,925/ton. Oil futures dropped sharply Wednesday in a late day selloff that knocked 2.5% off the price of a barrel of oil. Oil's drop came almost immediately after the release of the Fed's latest Beige Book report, which found economic growth modest or slight in most parts of the country, and the jobs market showing little improvement. Earlier in the day, prices jumped briefly after a weekly U.S. oil inventory report appeared to reflect bullish oil figures, but prices quickly fell back. Light, sweet crude for November delivery settled down $2.23, or 2.5%, at $86.11 a barrel on the New York Mercantile Exchange. November futures go off the board Thursday. The December contract finished down $2.24, or 2.5%, at $86.29. Brent crude on the ICE Futures Europe exchange ended down $2.76, or 2.5%, at $108.39 a barrel. Gold futures settled lower for a third day Wednesday as a rebound in the U.S. dollar and weakness in U.S. equities markets kept pressure on the precious metal. The most actively traded contract, for December delivery, fell $5.80, or 0.4%, to settle at $1,647 a troy ounce on the Comex division of the New York Mercantile Exchange.

More from IBT Markets:
Follow us on Facebook.
Follow us on Twitter.
Subscribe to get this delivered to your inbox daily