US stocks head for a third day of declines
By JOSHUA FREED
the associated press | December 13,2013
Trader Luigi Muccitelli, right, works on the floor of the New York Stock Exchange Thursday.
Wall Street’s third down day in a row pushed stocks to their lowest levels in a month as investors worried that the end may be nearing for the Federal Reserve’s support for the economy.
The Fed’s stimulus efforts have been a key factor in the bull market that has pushed the Standard & Poor’s 500 index 25 higher percent this year. Investors know it will end sooner or later. But the timing, and the fallout, are uncertain.
Until this month, stocks had risen for eight weeks straight. But stocks posted their biggest declines in five weeks on Wednesday, and dropped further on Thursday. Now they’re on the verge of their second weekly loss in a row.
In afternoon trading, the Dow Jones industrial average was down 90 points, or 0.6 percent, at 15,753. The Standard & Poor’s 500 index was down three points, or 0.2 percent, at 1,779. The Nasdaq composite edged up two points, or 0.1 percent, to 4,005.
Stocks posted their biggest declines in five weeks on Wednesday, but the Dow is still up 20 percent for the year, and the S&P 500 is up 24 percent.
“We don’t think we’re in a bubble, however we do know we’re in an expensive market,” said Marty Leclerc, chief investment officer and portfolio manager at Barrack Yard Advisors.
Leclerc said indices have risen 50 percent over the past couple of years, while earnings are up 12 percent, so it “wouldn’t be unusual to have a step backwards even in the confines of a bull market run.”
In economic news, the number of people seeking unemployment benefits rose to about where it was before the Great Recession.
Also, U.S. shoppers spent more money on appliances, furniture and cars in November. Spending had been muted for months heading into the crucial holiday shopping period, a worrisome sign for investors. Retail sales rose 0.7 percent last month, the biggest gain in five months. October sales were also revised higher.
That’s the kind of economic data that has been interpreted to mean that the U.S. economy is strong enough for the Fed to reduce, or “taper,” as it’s called on Wall Street, its stimulus program.
“We get this taper mania, where every piece of economic data gets examined very closely,” said Ryan Detrick, senior technical strategist with Schaeffer’s Investment Research.
Detrick doesn’t think that will happen as soon as this month. “I don’t think the data’s been strong enough for that,” he said.
Social networking stocks continued to be strong. Facebook jumped $2.56, or 5 percent, to $51.94 after the stock was added to the S&P 500 index. Twitter rose $3.16, or 6 percent, to $55.48.
Lululemon Athletica plunged $7.59, or 11 percent, to $60.76 after the upscale yoga clothing maker said sales will be flat in the next quarter and revenue for the year will be less than it had predicted. Several gaffes have hurt sales of its $100 yoga pants and other products. In the spring Lululemon pulled some of its pants from stores after complaints that they became see-through. Two days ago, founder Chip Wilson stepped aside as chairman, and the company named a new CEO.
Hilton Worldwide, the world’s largest hotel company, jumped $1.77, or 9 percent, to $21.76 on its first day of trading. The company raised $2.35 billion in its initial public offering, more than the $2.1 billion generated by Twitter’s IPO last month.
Airlines rose, led by Southwest Airlines Co., which gained by 78 cents, or 4 percent, to $18.75 after an upgrade by an analyst at Bank of America Merrill Lynch. United Continental Holdings Inc. rose $1.20 or 3 percent, to $37.78.