U.S stocks fall on fresh talk of Fed stimulus ending; Dow drops 1.36%
Published May 31, 2013 04:50PM ET
Monetary stimulus tools such as the Fed's USD85 billion monthly bond-buying program push down interest rates and flood the economy with liquidity to spur recovery, a combination that sends stock prices rising as a side effect.
Stocks dropped particularly hard amid sentiments that a correction may be due for U.S. equities.
At the close of U.S. trading, the Dow Jones Industrial Average finished down 1.36%, the S&P 500 index ended down 1.43%, while the Nasdaq Composite index fell 1.01%.
Positive economic data helped fuel a selloff on Wall Street Friday.
The Thomson Reuters/University of Michigan's final consumer sentiment index rose to 84.5 in May from 83.7 in April.
Analysts were expecting the index to remain unchanged this month.
A separate report showed that the Chicago purchasing managers' index climbed to 58.7 this month from 49.0 in April, beating expectations for a rise to 50.0.
Fed officials have said that they may scale down stimulus tools once economic indicators improve, and uncertainty surrounding Friday's data sent investors selling stocks and chasing the safe-haven dollar, the beneficiary of growing sentiments that the days of ultra-loose policy may be ending.
The Federal Reserve has kept interest rates low since the downturn and has flooded the economy with liquidity under the current bond-buying program and with similar programs in the past, which have helped push up stock prices in recent years.
Concerns that monetary support may be ending soon sparked fears on Friday that U.S. equities may be headed for a correction, which fueled the selloff.
Leading Dow Jones Industrial Average performers included Intel, up 0.37%, Alcoa, up 0.12%, and Microsoft, down 0.23%.
The Dow Jones Industrial Average's worst performers included Pfizer, down 3.47%, Hewlett-Packard, down 3.21%, and UnitedHealth Group, down 3.05%.
European indices, meanwhile, finished lower.
After the close of European trade, the EURO STOXX 50 fell 1.06%, France's CAC 40 fell 1.19%, while Germany's DAX 30 finished down 0.61%. Meanwhile, in the U.K. the FTSE 100 finished down 1.11%.
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Written By: Investing.com
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