Tags: Fed | taper | stock | rally

Experts: Fed Slows Stock Stampede to a Trot

Sunday, 02 Feb 2014 01:16 PM

By Dan Weil

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The Federal Reserve's tapering of its quantitative easing is putting the kibosh on stocks, experts say.

"This is the taper of the bull market run," Michael Yoshikami, CEO of Destination Wealth Management, told CNBC. "The bull run is still intact, but it's not a stampede anymore. It will be a slower trot."

The Fed Wednesday announced its second tapering, again cutting bond purchases by $10 billion a month to leave them at $65 billion.

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"What comes with free money is that at some point it's got to stop," New York University professor Nassim Taleb told CNBC.

He actually views last week's stock market volatility as minor. "The minute the free money stops, . . . then we'll talk about volatility," Taleb said.

The Standard & Poor's 500 Index slumped 3.6 percent in January after soaring 29.6 percent last year.

"What you've got is a loss of capital or the potential for a lot less capital going into the international markets," Susan Fulton, founder of FBB Capital Markets, told CNBC.

"We see it primarily as a reaction to the Fed moving to increase their withdrawal of purchases of Treasurys, [which] impacts quite dramatically."

Jim Russell, senior equity strategist for U.S. Bank Wealth Management, says the market was poised for a fall after its surge in 2013.

"We can blame the recent pullback on the emerging markets or capital flows, but at the end of the day, it was going to happen anyway because markets rallied a bit too much at the end of last year," he told MarketWatch.

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