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US stocks may fall again as Fed stays course

ByREUTERS
January 25, 2014 04:44

NEW YORK - Wall Street managed to avoid major sell offs in 2013, but bears look ready - and anxious - to take command.

U.S. stocks could be set for another sell off next week as the Federal Reserve is expected to announce it will keep withdrawing its economic stimulus, further pressuring equities already roiled by a flight from emerging markets.



Investor sentiment turned strongly bearish this week as emerging markets were hit by both country-specific problems and the realization that the Fed's trimmed bond-buying program reduces the liquidity that has boosted higher-yielding emerging market assets and put a floor under U.S. stock prices.

The Fed's plan to gradually withdraw its stimulus has long been expected to lead to a pullout from emerging markets. But the prospect of an economic slowdown in China added to concerns on Friday that emerging markets, particularly those with large current account deficits, may struggle to support their currencies this year.

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