Stock Market Today: Stocks Can't Shake Fed Hangover

Wall Street's weakness at the end of Wednesday's session extended into Thursday as investors continued to digest the Federal Reserve's dour commentary. More discouraging economic data delivered fresh on Thursday morning didn't help.

The Labor Department said initial unemployment claims for last week came in at 860,000 – a lower total than most estimates but a still-sluggish number that prompted Allianz chief economic advisor Mohamed El-Erian to call the recovery pace "below what's both needed and possible." Backing that up was a Philadelphia-region manufacturing reading that dropped from 17.2 in August to 15.0 in September, indicating slower expansion.

And then there's the Fed, which signaled it would keep its benchmark interest rate low for years, but also urged Washington to provide fiscal assistance to back the economy.

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"The Fed is out of tools and stock investors are finally realizing this," says Greg Swenson, founding partner of London-based investment bank Brigg Macadam. "With rates this low and quantitative easing ramped up, there is little the Fed can do to help the economy rebound or limit the fallout from any unexpected economic weakness in the near-term."

The Dow Jones Industrial Average slid 0.5% to 27,901, snapping a four-day winning streak.

Other action in the stock market today:

• The Nasdaq Composite lost 1.3% to 10,910.
• The S&P 500 declined 0.8% to 3,357.
• The Russell 2000 slipped 0.7% to 1,541.
• Snowflake (SNOW), the cloud firm that pulled off a sensational IPO yesterday that more than doubled from its listing price, declined 10.3%.
• Sumo Logic (SUMO), another cloud company that specializes in data analytics, priced at $22 per share, above its $17-$21 expected range. The stock closed 22.2% higher to $26.88 per share.

More of the Wall Street Yo-Yo

Investors, strap yourself in – this market is looking more and more like it could provide the roller-coaster ride it typically does in September.

"As we have noted in prior reports, any significant changes to central bank policy will likely trigger equity market volatility," says Dan Wantrobski, technical strategist at Janney Montgomery Scott, "but yesterday's (and this morning's) reaction to effectively no change shows how sensitive and vulnerable equities are right now."

Looking for protection for your portfolio? You could do worse than many of the market's blue-chip stocks, which not only are among the best-capitalized against economic shocks but also are positioned to at least tread water if not thrive in a recessionary environment.

They're certainly good enough for hedge funds, which have poured hundreds of billions of dollars into Wall Street's steadiest large-caps.

Yes, occasionally the "smart money" likes to make a splash with speculative picks, just like Warren Buffett recently did with Snowflake's initial public offering. But typically, hedge funds prefer the mix of growth potential, stability and dividends that well-heeled blue-chip companies tend to offer.

Read on as we look at the 25 blue chips that are most popular with the hedge-fund crowd, including several growth picks that are really coming into their own.