U.S. stocks fall as Fed talks timing of taper
By Kate Gibson, MarketWatch
NEW YORK (MarketWatch) — U.S. stocks extended losses into a second day Tuesday as Federal Reserve official Charles Evans said the economy should be able to shoulder reduced Fed asset purchases later this year.
“It’s more of this taper tempest that we seem to go into. The market gets a little confused; it seems fine as long as the talk around taper is around data, but it gets flustered when you talk about the calendar,” said Jim Dunigan, managing executive for investments at PNC Wealth Management.
Bloomberg Charles Evans, president of the Chicago Fed. “There appears to be a lot on our plates as we get into fall season, with budget talks, a new Fed chair and the debt ceiling, which might lead the market to churn here a bit,” said Dunigan, who added that the market has reached an inflection point, given its “fairly significant upside performance,” with the S&P 500 up 19% so far this year.
After falling 139 points, the Dow Jones Industrial Average
DJIA -0.60% shed 93.39 points, or 0.6%, to end at 15,518.74, with International Business Machine Corp.
IBM -2.31% leading the decline that included 24 of the Dow’s 30 components.
IBM’s
IBM -2.31% shares fell 2.3% after the computer-services company
reportedly said U.S. employees in its hardware unit would take a week furlough with reduced pay in August and after Credit Suisse downgraded the tech giant to underperform from neutral.
The S&P 500 index
SPX -0.57% fell 9.77 points, or 0.6%, to 1,697.37, with materials pacing broad sector declines. The Nasdaq Composite
COMP -0.74% shed 27.18 points, or 0.7%, to 3,665.77.
For every stock rising, roughly three fell on the New York Stock Exchange, where 658 million shares traded. Composite volume cleared 3.1 billion.
The
dollar DXY -0.30% fell against the currencies of major U.S. trading partners, including the Japanese yen
USDJPY -0.59% and the euro
EURUSD +0.38% .
Crude-oil futures
CLU3 -1.03% declined $1.26, or 1.2%, to $105.30 a barrel and
gold futures
GCZ3 -1.45% slid $19.90, or 1.5%, to $1,282.50 an ounce on the New York Mercantile Exchange.
Three undervalued stocks ready to rally
Stock bargains are growing scarcer. One way to find relative bargains is to search among companies that have lagged behind the market’s recent rally, but which look likely to catch up in coming quarters. Jack Hough of Barron's has details. Photo: Getty Images.
“If exports are improving, things in Europe seem to be getting better, so maybe it’s coming out of recession, and maybe China isn’t as bad as the headlines would suggest,” said PNC’s Dunigan.
Moving issues
CVS Caremark Corp.
CVS -2.81% dropped 2.8% after the provider of prescription drugs cut the top end of its 2013 adjusted earnings target.
J.C. Penney Co.
JCP -3.91% retreated 3.9%.
Bucking the negative trend, Fossil Group Inc.
FOSL +17.81% rose nearly 18% after the fashion-accessories supplier reported better-than-expected results and raised its 2013 earnings forecast.
Fed timing
Evans, president of the Chicago Fed, expects growth in the second half of the year to pick up to an annual rate of 2.5% and climb above 3% next year. The central bank could then taper its asset purchases in several stages, and likely end them by mid-2014,
said Evans, who is a voting member of the Federal Open Market Committee.
“We will hear more of this type of talk from Fed members as they do their verbal best to soften the market impact of a growing likelihood of a fall taper,” emailed Peter Boockvar, chief market analyst at the Lindsey Group
U.S. stocks finished mostly lower on Monday after a better-than-expected report on services-sector growth and remarks by Dallas Fed Bank President Richard Fisher that the central bank is closer to tapering its bond purchases.
Kate Gibson is a reporter for MarketWatch, based in New York.