By Anora Mahmudova, MarketWatch
NEW YORK (MarketWatch) -- U.S. stocks deepened losses on Tuesday
after a bipartisan budget deal cleared a key hurdle in the Senate.
Main indexes drifted lower amid a slew of economic data and as the
Federal Reserve began two-day deliberations to decide whether to
slow down the pace of the stimulus program.
A brief boost from better-than-anticipated housing data was
short-lived. Dow Jones Industrial Average (DJI) reversed earlier
gains and was down 38 points to 15,846.00. The S&P 500 index
(SPX) lost 8 points, or 0.4%, to 1,778.77, while Nasdaq Composite
(RIXF) was down 14 points, or 0.14, to 4,015.61.
Main indexes rose during the previous session buoyed by positive
economic data showing improving business activity across the
country.
"After a big run in recent month and a small correction last
week, markets are now reflecting on the outcome of the Fed
meeting," said Colin Cieszynski, senior market analyst at CMC
Markets.
"Markets have priced in a 10% chance of a December taper, but
most analysts do not think it will happen until early next year.
Even if they decide to start the taper in December it will be
modest, so the Fed can test the waters. While unemployment figures
may warrant it, inflation is still below what the Fed would like it
to be," he added.
Investors digested a slew of economic data to assess how and
when the Fed will decide to begin reducing its $85 billion a month
stimulus program, which added more than a $1 trillion to its
balance sheet over the past year. The Fed is expected to announce
its decision on Wednesday afternoon.
Prices of consumer goods did not change from the previous
months, leaving the inflation rate on the annualized base at 1.2%,
still below the Fed target, making its decision to start the taper
sooner rather than later more difficult. The U.S. current-account
deficit narrowed to $94.8 billion in the third quarter, marking the
lowest level since Fall 2009, the government said Tuesday.
In corporate news, shares of Facebook Inc. (FB) rose 2% after
The Wall Street Journal reported the social network will begin
selling video advertisements later this week.
Shares in Frontier Communications Corporation (FTR) jumped 8.4%
after the company announced a deal to buy AT&T's wireline
residential and business services and associated assets in
Connecticut in an all-cash transaction.
Boeing Co. (BA) shares rose 1.2% after the company said late
Monday it would boost its quarterly dividend by 50% and its board
approved $10 billion to repurchase outstanding shares, which will
be added to what's left of a 2007 buyback plan.
Shares in 3M Company (MMM) rose 2.7% after the maker of Scotch
tape and Post-it Notes said it was raising its quarterly dividend
by 35%.
Shares of KKR Financial Holdings (KFN) jumped 24% after a
late-Monday announcement that KKR & Co. (KKR.AE) would acquire
it for $2.6 billion in an all-stock deal. Shares of KKR & Co.
dropped 5%.
More stories on MarketWatch:
Follow the stock-market action live
What if 2014 is an 'average' year?
Only 11% of fund managers see a taper this week, survey
finds
Subscribe to WSJ: http://online.wsj.com?mod=djnwires