FED hints at end to stimulus; stocks bonds fall

Federal Reserve Chairman Ben S. Bernanke said Wednesday that the central bank expects to begin scaling back its massive economic stimulus later this year and end the program by mid-2014 if the recovery continues apace.

The Fed has been spending $85 billion a month to buy long-term bonds and boost the economy. The effort has been credited with propping up the housing market and fueling record highs in the stock markets...

...Stock markets, however, were not as enthusiastic as investors took the remarks as a sign that the Fed is preparing to tighten its policy stance after years of easy money. Major stock indexes dropped when Bernanke began the press conference, then kept sliding. The Dow Jones average and Standard Poor’s 500-stock index closed down nearly 1.4 percent Wednesday, with the Dow dropping more than 200 points. The yield on 10-year Treasuries jumped nearly 8 percent amid a selloff in the bond market.

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