Wall St. Falls On concern Fed May Scale Back Stimulus

by
Stocks declined on Tuesday, extending recent losses as investors took profits on speculation the Federal Reserve may reduce its economic stimulus.

Wall St. Falls On concern Fed May Scale Back Stimulus

Stocks declined on Tuesday, extending recent losses as investors took profits on speculation the Federal Reserve may reduce its economic stimulus.

Growth-oriented sectors were among the hardest hit, a change from last week when investors booked profits in high-dividend paying shares. The S&P energy index .SPNY was down 0.9 percent.

Decliners were outpacing advancers on the New York Stock Exchange by about 2 to 1. Decliners were ahead on Monday as well even though stocks closed higher.

The S&P 500 inched closer to its 50-day moving average at around 1,602, signaling more bearish sentiment.

"The market has taken on kind of a heavy feel to it. Clearly the 50-day moving average around 1,600 seems to have almost magnetic qualities," said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia.

Kansas City Federal Reserve Bank President Esther George urged the Fed to ease off its aggressive bond purchases. George has been a steady critic of the program and has voted against it at every Fed meeting so far this year.

George said slowing bond buying would help wean financial markets off their dependence on ultra-easy money from the U.S. central bank.

The Dow Jones industrial average .DJI was down 93.84 points, or 0.62 percent, at 15,160.19. The Standard & Poor's 500 Index .SPX was down 9.99 points, or 0.61 percent, at 1,630.43. The Nasdaq Composite Index .IXIC was down 20.77 points, or 0.60 percent, at 3,444.59.

All three indexes at one point fell more than 1 percent.

Intraday market swings have increased in recent weeks. Minutes from the central bank's most recent meeting and recent remarks by Chairman Ben Bernanke have heightened concerns the Fed may reduce its bond-buying program sooner than expected.

Dollar General Corp (DG.N) was down 7.9 percent at $49.31, the worst performer on the S&P 500, after the discount chain cut the top end of its full-year profit forecast. The company warned of moderating sales growth and declining margins as frugal shoppers make it difficult to raise prices.

View Comments

Recommended For You