US Stocks Wall St falters in volatile session on Fed worries

Business & Markets 2013
Written by Reuters
Thursday, 23 May 2013 07:15
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NEW YORK (May 23): U.S. stocks fell on Wednesday with the S&P
500 posting its biggest decline in three weeks, after minutes from the
latest U.S. Federal Reserve meeting showed some officials were open
to tapering large-scale asset purchases as early as at the June
meeting.
Trading was volatile - the Dow and the S&P indexes both rose more
than 1 percent during the morning, but fell more than 1 percent in the
afternoon.
The minutes followed comments from Chairman Ben Bernanke, who
said the Fed could decide to scale back the pace of bond purchases at
one of the "next few meetings" if the economic recovery looked set to
maintain forward momentum.
The comments were a blow to a market that had accelerated after
Bernanke said the central bank needed to see further signs of traction in
the economy before it tapered stimulus.
"This is a very sensitive market and particularly sensitive to any notion
that tapering will come too soon," said Quincy Krosby, market strategist
at Prudential Financial in New York.
"No one wants to be selling if the data reaches the point when the Fed
begins to specifically talk about tapering. The market doesn't wait for
the Fed to move. It will move before. That's how it operates."
Krosby also added that Bernanke went off-script and in his effort to be
transparent, "he confused the market."
According to the minutes of the April 30-May 1 policy meeting released on Wednesday, "a number" of officials were open to
tapering large-scale asset purchases as early as the June meeting, but disagreement continued on what conditions would
suffice to begin that move.
One official preferred to begin decreasing purchases immediately and another wanted to add more accommodation
immediately, but ultimately most felt it was important simply to be prepared to adjust the pace up or down in response to
incoming data.
Investors have increasingly turned their attention to when the Fed's current $85 billion-per-month bond purchase program
might end or slow. The stimulus has been a major force behind a rally in U.S. equities that has helped the S&P 500 and Dow
industrials gain about 16-17 percent so far this year.
The Dow Jones industrial average was down 80.41 points, or 0.52 percent, at 15,307.17. The Standard & Poor's 500 Index
was down 13.81 points, or 0.83 percent, at 1,655.35. The Nasdaq Composite Index was down 38.82 points, or 1.11 percent,
at 3,463.30.
The S&P 500 rose as high as 1,687.18 and fell as low as 1,648.86 during Wednesday's trading session while the Dow rose
as high as 15,542.40 and fell as low as 15,265.96.
"You have more volatility than you've had for a long time," said Uri Landesman, president, Platinum Partners in New York.
"The technician in me looks at a rocket shot straight up and says you could get a pretty good correction here without that
much work. There aren't really solid levels of support on the way down because we broke through all of them so quickly."
All 10 sectors on the S&P 500 closed negative, with energy and utilities leading the decline. The energy sector index fell 1.2
percent while the utilities sector fell 1.6 percent.
Bristol-Myers Squibb shares rose 5.3 percent at $46.40 after a Citi note highlighted excitement surrounding so-called
immunotherapy, in the wake of positive results from clinical trials conducted by companies such as Bristol-Myers and Roche
Holding.
Target Corp cited unseasonably cold weather as it reported a 0.6 percent decline in first-quarter sales at U.S. stores open at
least a year. Target cut its full-year profit forecast and shares slid 4 percent to $68.40.
Toll Brothers shares rose 2.9 percent to $37.07 after the largest U.S. luxury homebuilder posted a 46 percent rise in quarterly
profit, suggesting the housing recovery is picking up pace across the industry. - Reuters