By Kate Gibson, MarketWatch
NEW YORK (MarketWatch) -- U.S. stocks fell on Friday, chalking
up a third weekly loss in four, with investors on guard ahead of
next week's monetary-policy decision by the Federal Open Market
Committee.
"We didn't get the pullback in May when we thought we would, so
it looks like June is giving us some of that," said Andrew
Fitzpatrick, director of investments at Hinsdale Associates
Inc.
A day after Wall Street rallied on thinking the Federal Reserve
would continue record-low interest rates, investors took a cautious
stance on the final session of a losing week.
The FOMC holds a two-day policy gathering next week, with Fed
Chairman Ben Bernanke due to hold a news conference Wednesday,
after the FOMC decision.
Wall Street is tracking economic reports for clues as to whether
the economy is strong enough to withstand the much-talked of
tapering of Fed stimulus, specifically its $85 billion in monthly
bond purchases.
"The economy is not where it needs to be for the Fed to cut off
stimulus, with inflation coming in under their target and with the
jobs report still not being really strong, it still leaves room for
the Fed to maintain its policies," said Fitzpatrick.
On Friday, the Fed was advised to step carefully in scaling back
from its monetary easing by the International Monetary Fund, which
also cut its U.S. growth outlook for next year to 2.7% from the 3%
projected in April.
After climbing 29 points and falling 131, the Dow Jones
Industrial Average (DJI) lost 105.90 points, or 0.7%, to
15,070.18.
Down 1.2% for the week, the Dow on Friday made its fourth
consecutive triple-digit move.
A day after its best session since Jan. 2, the S&P 500 index
(SPX) retreated 9.63 points, or 0.6%, to 1,626.73, with financials
pacing the losses that included all but one of its 10 major
sectors.
The S&P 500 finished with a 1% weekly drop.
The Nasdaq Composite (RIXF) shed 21.81 points, or 0.6%, to
3,423.56, leaving it off 1.3% from last Friday's close.
Decliners ran ahead of advancers on the New York Stock Exchange,
where nearly 626 million shares traded. Composite volume neared 2.9
billion.
Energy prices rose, with crude-oil futures (CLN3) climbing to
highs not seen since September, up $1.82 at $97.85 a barrel on the
New York Mercantile Exchange. Gold also gained, with futures (GCQ3)
rising $9.80 to close at $1,387.60 an ounce.
Treasury prices advanced, with the yield on the 10-year note
(10_YEAR) used in determining mortgage rates and other consumer
loans down to 2.131%.
Cable stocks were among the more active issues, with Time Warner
Cable Inc. (TWC) up 8.1% after CNBC reported it held discussions
with Liberty Media Corp. about industry consolidation, including a
possible union between Time Warner Cable and Charter Communications
Inc. (CCMMV), in which Liberty Media holds a large stake.
Groupon Inc. (GRPN) jumped almost 12% after the daily-deals site
drew an upgrade by Deutsche Bank AG.
Smith & Wesson Holding Corp. (SWB) rose 5.2% after the gun
manufacturer reported initial earnings above expectations.
Smithfield Foods Inc.'s (SFD) shares held steady after the hog
producer reported a steep drop in net profit.
Reports Friday had the preliminary June reading of the
University of Michigan/Thomson Reuters consumer-sentiment gauge
declining from a six-year high to 82.7 from a final May reading of
84.5.
And, ahead of Wall Street's start, stock-index futures retained
mild losses after the Labor Department reported producer prices
rose 0.5% in May, the first increase in three months, and then a
separate report had U.S. industrial production unchanged in
May.
On Thursday, late-session gains kicked in after Wall Street
Journal reporter Jon Hilsenrath, considered an influential voice on
central-bank policy, said Bernanke will likely choose next week's
meeting to try to soothe market fears that the Fed is headed
towards the easing exit in a hurry.
"It's been a roller coaster, certainly in the last few days. I
think people are comforted by thinking the Fed is not set to make
any changes. There's a lot of talk, but no action. The market is
still unsure, but leaning towards no action," said Fitzpatrick at
Hinsdale Associates.
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