Wall Street slips, after soaring to all-time intraday high, after Fed comments

NEW YORK: Stocks fell on Thursday, with the downturn accelerating
late in the day after a Federal Reserve official said the central bank
could begin easing up on its monetary stimulus this summer.
The three major U.S. stock indexes had earlier traded in a tight range, supported by a gain of more than 12 percent in Cisco Systems shares and as investors took in a batch of economic data that pointed to slower growth.
But the S&P 500 finished near its session low following the comments from John Williams, the president of the Federal Reserve Bank of San Francisco,
who also said the Fed could end its bond purchases later this year,
assuming the labor market continues to grow stronger.[ID:nN9E8KD02P]
Williams is not a voter on the Fed's policy-setting panel this year.
"When
a Fed governor is out there and mentions this possibility, it does
spook the market a little because I don't think anybody quite knows how
the stock market is going to react once (the stimulus) is taken away,"
said Tim Ghriskey, chief investment officer of Solaris Group in Bedford Hills, New York.
The
Fed's purchases of $85 billion a month in bonds has been a significant
driver of the rally in equities that has taken indexes to record highs
and pushed the S&P 500 up nearly 16 percent this year.
Analysts also said the comments could have been viewed as a reason to take a pause after such a strong run-up in stocks.
"It turned a boring day into a bit of profit taking," Ghriskey said.
Other
Fed officials on Thursday called for the central bank to stop buying
mortgage-backed bonds, citing improvement in the housing market.
The Dow Jones industrial average dropped 42.47 points, or 0.28 percent, to close at 15,233.22.
The Standard & Poor's 500 Index fell 8.31 points, or 0.50 percent, to end at 1,650.47.
The Nasdaq Composite Index slipped 6.37 points, or 0.18 percent, to finish at 3,465.24.
Volume
was roughly 6.45 billion shares on the New York Stock Exchange, the
Nasdaq and the NYSE MKT, compared with the year-to-date average daily
closing volume of about 6.34 billion.
Decliners
outnumbered advancers on the NYSE by a ratio of 3 to 2, while on the
Nasdaq, 14 stocks fell for nearly every 11 that rose.
Earlier, the Dow reached an all-time intraday high at 15,302.49.
The
Nasdaq fared better than the other two major indexes as Cisco shot up
12.6 percent to $23.89 after the network equipment maker posted a
higher-than-expected quarterly profit and said current-quarter revenue
could increase.
Dell ,
in the midst of a takeover battle between activist investor Carl Icahn
and its billionaire founder, reported a steep drop in quarterly profit
after the closing bell as personal computer sales continued to shrink.
The stock slipped 0.5 percent to $13.37 in after-hours trade.
[ID:nL2N0DX272] During the regular session, Dell's stock dipped 0.2
percent to end at $13.43.
In other news after the close, J.C. Penney
reported that operating margins plunged in the first quarter while
total sales and same-store sales registered double-digit declines - in
line with its warning last week. The stock vacillated between gains and
losses, and was most recently down 1 percent at $18.60. [ID:nL2N0DX2AP]
The company has gone back to basics with marketing and promotions aimed
at winning back customers, who left in droves under the failed strategy
of former Chief Executive Ron Johnson.
Early
in the day, economic data set a lackluster tone in markets as data from
the Philadelphia Federal Reserve showed factory activity in the
mid-Atlantic region contracted, while the Commerce Department reported
that U.S. housing starts plummeted 16.5 percent in April. New claims
for jobless benefits unexpectedly jumped last week.
However, investors had speculated that soft underlying inflation also means the Fed has room to continue its economic stimulus.
Wal-Mart Stores Inc
fell 1.7 percent to $78.50 and dragged on the Dow after the world's
largest retailer posted a quarterly profit that missed expectations,
with sales down 1.4 percent at U.S. stores open at least a year.
Tesla Motors Inc
shares gained 8.7 percent to $92.25 after the electric carmaker said it
aims to raise $830 million through a stock-and-debt offering that will
be used to repay its U.S. Department of Energy loans with interest. The
stock has surged more than 50 percent since the company reported
earnings last week. - Reuters