Why does Wall Street fear Fed's taper plan?

• Fed stimulus has been boon for stocks%2C and less support is viewed negatively
• Stocks have rallied during every Fed program %u2014 and dropped when Fed stopped support
• So-called %27taper talk%27 is again causing angst on Wall Street

NEW YORK — Wall Street, with its dependence on cheap money, is worried the stock market will suffer withdrawal when the Federal Reserve starts dialing back its stimulus.

For years, the Federal Reserve has been Wall Street's best friend as it injected tens of billions of dollars each month into the arteries of the stock market and economy — the financial world equivalent of a performance-enhancing drug.

But the Fed keeps hinting that it's getting ever closer to dialing back on its $85 billion monthly bond-purchase program, known as quantitative easing, or QE. Wall Street, despite first hearing about the Fed's plan to trim its asset purchases in May, still can't seem to get comfortable with the idea of less Fed support.

Joseph Quinlan, strategist at U.S. Trust, says investors are overreacting to "tapering," which he says is a sideshow to true policy "tightening," or when the Fed starts raising short-term rates, currently around 0%. "That's a story for late 2014 or 2015," he says.

The bond-buying program is credited with driving up stock prices, as it has flooded the market with cheap money that's found its way into the stock market in search of bigger returns. In the minutes of its October meeting, released Wednesday, the Fed said if the economy continues to improve, it could start "tapering" its bond purchases in "coming months."

While the Fed's decision to taper would be a sign the economy is healing, investors still worry that it will have a negative impact on stocks. Here's why:

• Performance doesn't lie. Since late 2008, the S&P 500 stock index has rallied every time the Fed announced a new asset purchase program, says Bespoke Investment Group. The benchmark index has risen in excess of 20% during QE1, QE2, Operation Twist and QE3.

But the only two times the Fed hasn't been in the market buying bonds, the S&P 500 fell 9% and 14.5%, respectively, Bespoke says. In May, the first hint of tapering caused a "Taper Tantrum" and 5.8% drop.

Those market moves are not a "coincidence," says Paul Hickey, Bespoke's co-founder.

• Questions about the economy. There's concern that underlying business conditions aren't strong enough to keep the economy growing without Fed support, says Todd Schoenberger, managing partner at LandColt Capital. Investors want to see stronger corporate earnings, better job growth and faster GDP growth.

• Fear of the unknown. The Fed's bond-buying program is unprecedented, an experiment, which creates uncertainty, adds Ryan Detrick, senior technical strategist at Schaeffer's Investment Research.

"No one knows exactly what tapering will do," he says.

Still, Detrick doesn't expect a massive sell-off, as the Fed is unlikely to reduce stimulus before the economy is strong enough. Nor will it take away all the stimulus at once.

"A steadily improving jobs market and economy," he says, "could do wonders for the confidence of investors, vs. the perception that the Fed is just doing all of this with smoke and mirrors."