Stocks fall as investors grapple with Fed's recovery timeline

Stocks took a nosedive at the opening bell and fought back from their lows, before finding themselves deep in the red again around midday.

The Dow, which even briefly turned positive, was down 0.9%, or 250 points. At its lowest, the index was down 384 points.

The S&P 500 was down 1.4%, and the tech-heavy Nasdaq Composite, fell 2%.

Stocks finished mixed on Wednesday following the central bank's monetary policy update, and sentiment clearly hasn't improved overnight.

The Fed committed to lower interest rates for longer and to continue asset purchases to help the US economy recover from the pandemic shock. It reiterated that the speed of the economy depended on the path of the virus.

A survey of Fed officials showed the group expects rates to remain at or near zero through 2023. In theory that's good for stocks, because it means that companies can borrow at cheaper interest rates. But it also means that the economic recovery will be slower than many may have hoped.

Powell also reiterated that there likely needed to be more fiscal stimulus.

While the labor market has improved significantly since the spring, "It's a long way from maximum employment," Fed Chairman Jerome Powell told reporters Wednesday. As of the August jobs report, the country was still down 11.5 million jobs from February.

On Thursday, initial jobless claims decreased to 860,000 on a seasonally adjusted basis, still about four times as high as before the pandemic.

Even though economic data continues to improve, showing that the economy fared much better in the current, third quarter than in the depressed second quarter, the rebound is "expected to fade at a much more rapid rate" than expected, said Steven Ricchiuto, US chief economist at Mizuho Securities, in a note to clients.