By Kate Gibson, MarketWatch
NEW YORK (MarketWatch) -- U.S. stocks fell on Wednesday,
extending losses into a third session, as Wall Street worried about
the timing of cuts in the Federal Reserve's $85 billion in monthly
bond purchases.
The market's retreat is "attributable to comments made yesterday
by [Fed Bank of Chicago President] Charles Evans regarding the
possibility of tapering beginning in September. There's a certain
contingent in the market that doesn't want to see quantitative
easing end, and thinks QE is the primary pillar that the market is
resting on," said Matthew Kaufler, portfolio manager at Federated
Investors.
The S&P 500 index declined 0.6% on Tuesday after Evans said
the central bank could start easing its asset buys as soon as
September.
"I personally would be very pleased once tapering begins and
hopefully continues to its proper conclusion. As a largely
capitalistic society, we want our institutions to stand on their
own two feet, so the quicker we can get back to that, the better
off we'll be," Kaufler added.
The market is overbought after a six-week run higher, but much
of the fretting over the Fed's monetary moves is already priced in,
which is "why this decline shouldn't carry that far," said Bruce
Bittles, chief investment strategist at R.W. Baird & Co.
And while Bittles concurred with the view that equities are
reacting to the idea of Fed "tapering in September," he does not
think the central bank will reduce stimulus this year, given the
still weak labor market.
"Most of the jobs created this year are part-time, that's why I
say I think the economy is still suspect," he said. Read another
view from Goldman Sachs on September tapering.
Off session lows that had it down 97 points, the Dow Jones
Industrial Average (DJI) was more recently off 56.39 points, or
0.4%, at 15,462.15, with shares of Bank of America Corp. (BAC)
pacing blue chip declines that included two thirds of its 30
components. Its shares fell 2%, a day after the Department of
Justice filed suit against the bank for allegedly misleading
investors about loans linked to mortgage-backed securities.
Also weighing on the Dow, Walt Disney Co. (DIS) declined 1.7%
after the entertainment company reported fiscal third-quarter
profit little changed from the year-ago period.
The S&P 500 index (SPX) shed 7.01 points, or 0.4%, to
1,690.36, with financials falling hardest among its sectors.
"We've enjoyed a strong seasonal tailwind the last few months
that's going to turn into a headwind in what is typically a weak
season for stocks. Plus, corporate earnings for the second quarter
were basically flat," said Bittles.
The Nasdaq Composite (RIXF) declined 15.38 points, or 0.4%, to
3,650.36.
For every share gaining, more than two fell on the New York
Stock Exchange, where 315 million shares traded by 1:45 p.m.
Eastern. Composite volume exceeded 1.8 billion.
The dollar (DXY) edged lower against the currencies of major
U.S. trading partners including the yen (USDJPY), while Treasury
prices rose, lowering the yield on the 10-year note by 5 basis
points to 2.599%.
Oil prices slipped, with the September crude futures (CLU3)
contract down $1.03, or 1%, at $104.27 a barrel on the New York
Mercantile Exchange.
Gold futures turned higher, with the futures contract for
December delivery (GCZ3) up $2.90, or 0.3%, to $1,285.40 an ounce
on the Comex.
First Solar Inc. (FSLR) fell almost 14% after the solar-panel
manufacturer reported a profit drop in the second quarter.
Zillow Inc.'s (ZILLOW.XX) shares dropped 7.4% after the
real-estate information site reported a second-quarter loss. Read
Wednesday's Movers & Shakers.
Time Warner Inc. (TWX) climbed 1.5% after the entertainment
provider reported larger-than-expected quarterly revenue.
AOL Inc. (AOL) shares gained 1.7% after the Internet company
reported better-than-expected revenue for the second quarter and
said it would buy Adap.tv, a video advertising platform, for $405
million.
Ralph Lauren Corp. (RL) declined 6.5% after the clothing
retailer projected quarterly profit beneath estimates. (Read more
in Behind the Storefront:
http://blogs.marketwatch.com/behindthestorefront/2013/08/07/ralph-lauren-results-shock-spoiled-investors/.)
Computer Sciences Corp. (CSC) rose 6.9% a day after the
technology consultant hiked its earnings outlook.
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