Wall Street slips again as investors seek Fed clarity
NEW YORK: U.S. stocks declined on Wednesday, with the S&P 500 off for a fourth straight session as investors worried that the market's rally to record levels was not justified, given uncertainty over when the Federal Reserve will start to slow its stimulus.
The S&P 500 is on track to snap an eight-week winning streak, when it added nearly 7 percent and hit a series of record highs. The recent decline came partly on concerns about an imminent winding down ofFed stimulus.
Many market participants expect the Fed to announce a cut to its $85 billion in monthly bond purchases in March, but recent economic data increased expectations that the move may come sooner. The Fedhas said it would slow its stimulus program when certain economic measures meet its targets, including a decline in the U.S. unemployment rate.
The November ADP National Employment Report showed private-sector employers added 215,000 jobs in November, more than expected. This was the latest in a string of reports suggesting the economy's outlook was brightening.
"Stronger economics means earlier tapering, which is a negative for the market. On top of that, we've surged to new highs with a lot of optimism, and that normally calls for a pullback, if only briefly," saidBruce McCain, chief investment strategist at Key Private Bank in Cleveland, Ohio.
"If the decline is mostly about sentiment, we should work through it quickly and be back to seeing better action," he added. "But the pullback could be more pronounced, the more people focus on the Fed."
In the Fed's Beige Book, a collection of anecdotes from the central bank's business contacts across the nation, the Fed said employers had stepped up hiring in some parts of the country in October and early November, and the economy had expanded at a "modest to moderate pace."
The Dow Jones industrial average <.DJI> was down 29.12 points, or 0.18 percent, at 15,885.50. The Standard & Poor's 500 Index <.SPX> was down 3.03 points, or 0.17 percent, at 1,792.12. The Nasdaq Composite Index <.IXIC> was down just 0.77 of a point, or 0.02 percent, at 4,036.43.
Other signs of strength in the economy were figures showing that the U.S. trade deficit narrowed in October and new home sales recorded their biggest increase in nearly 33-1/2 years in October. The home sales report suggested that the housing market's recovery remains intact despite higher mortgage rates.
But the economic picture was muddied after the Institute for Supply Management said its services index fell to 53.9 last month from 55.4 in October and below a forecast for 55.0. A figure above 50 signifies expansion.
U.S. crude oil futures prices advanced for a fourth straight day, up 1 percent as government data showed an unexpected drop in U.S. stockpiles. Crude is up 5.1 percent over the past four sessions.
Shares of Marathon Oil <MRO.N> rose 1.2 percent to $36.66. The stock of Hess Corp <HES.N> added 1 percent to $81.98.
Among decliners, shares of clothing retailer Express Inc <EXPR.N> tumbled 22.7 percent to $19.06 after the company forecast quarterly earnings below analysts' estimates because of weaker-than-expected Thanksgiving sales.
OmniVision Technologies Inc <OVTI.O> slid 1.8 percent to $15.69 after the chipmaker forecast current-quarter revenue well below analysts' estimates.
Oculus Innovative Sciences Inc <OCLS.O> shares surged 117.6 percent to $5.07 after the company got the go-ahead from the U.S. Food and Drug Administration for its anti-scar gel.- Reuters
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