Stocks fall on Wall Street; Retailers slump
NEW YORK (AP) -- More positive news on the economy pushed stocks lower on Thursday as investors anticipate that the Federal Reserve is getting closer to reducing its stimulus program.
The number of Americans applying for unemployment benefits dropped to the lowest in nearly six years last week, and the U.S. economy grew at a robust 3.6 percent annual rate from July through September, the fastest since early 2012.
A record-setting run for the stock market has stalled in December as several signs of strength in the U.S. economy have emerged. That has led investors to anticipate that the Fed is getting ready to pull back on its $85 billion-a-month bond-buying program, which has been supporting financial markets. Investors will get more insight into the economy Friday when the government releases its monthly jobs report.
"If they do cut the bond purchases the knee-jerk reaction for the market will be to move down," said Chris Gaffney, a senior market strategist at EverBank.
The Dow Jones industrial average fell 21 points, or 0.1 percent, to 15,867 as of 12:07 p.m. Eastern time. The Standard & Poor's 500 index dropped three points, or 0.2 percent, to 1,789. The Nasdaq composite was down two points, or 0.1 percent, at 4,035.
Several retailers fell after reporting disappointing results. L Brands, the owner of Victoria's Secret, Bath & Body Works and other retailers, lost 42 cents, or 0.7 percent, to $62.80 after reporting that its sales dropped 5 percent last month.
Gaming company Electronic Arts was the biggest decliner in the S&P 500 index after Forbes reported that the company had been forced to delay future games from one of its developers due to ongoing problems with its Battlefield 4 game. The company's stock fell $1.63, or 7.3 percent, to $20.71.
The S&P 500 index has dipped 1 percent since the start of the month and is on course to log its first weekly decline in nine weeks. The losses have pared this year's advance for the index to 25.5 percent.
Stocks have surged this year as the Fed's stimulus has helped keep the economic recovery on track and corporations have produced record profits. Low interest rates have also made stocks more attractive in comparison to bonds.
The stock market may also be sliding this month as investors sell some of their best-performing holdings given the strong returns this year, said Natalie Trunow, chief investment officer at Calvert Investments, an asset management company.
"I just don't know if folks will try to squeeze another percentage point (out of the market), or just sell and go home," said Trunow.
In government bond trading, the yield on the 10-year Treasury note rose to 2.85 percent from 2.83 percent Wednesday. The yield is the highest it's been in more than two months as traders expect the Fed to reduce its bond purchases. The Fed has been keeping long-term interest rates low with their monthly bond purchases.
In commodities trading, the price of oil rose 49 cents, or 0.5 percent, to $97.68 a barrel. Gold fell $16.60, or 1.3 percent, to $1,230.70 an ounce.
Among other stocks making big moves:
- Morgan Stanley slumped 71 cents, or 2.3 percent, to $30.44 after analysts at Deutsche Bank cut its rating on the bank's stock to "hold" from "buy," on concern that volatile trading conditions in bond markets may hurt the bank's earnings.
- Dollar General rose $3.32, or 5.9 percent, to $59.68, after the retailer's earnings topped the estimates of analysts that follow the stock. Dollar General's net income rose as traffic improved and shoppers spent more per transaction.