US stocks drop on Fed taper talk
NEW YORK CITY—US stocks ended mostly lower Monday on fairly quiet trading during which some investors fretted about the possible pullback of the Federal Reserve’s aggressive bond-buying program.
The Dow Jones Industrial Average was down 46.23 (0.30 percent) at 15,612.13.
The broad-based S&P 500 dropped 2.53 (0.15 percent) to 1,707.14, while the tech-rich Nasdaq Composite Index added 3.36 (0.09 percent) at 3,692.95.
The US growth outlook appeared firmer as the Institute for Supply Management’s July purchasing managers index for the services sector showed a healthy jump in activity.
That raised some concerns that the Federal Reserve might taper its bond-buying program “sooner rather than later,” said Alan Skrainka, chief investment officer at Cornerstone Wealth Management.
Monday’s trade was “just a modest pullback,” Skrainka added.
Some investors also looked at comments from Federal Reserve Bank of Texas President Richard Fisher that advocated a quick tapering.
“Anytime there is Fed chatter, there is an impact on the market,” said Michael James, managing director of equity trading at Webush Securities, adding that the market could easily reverse itself Tuesday.
Apple rose 1.5 percent after the Obama administration overturned an International Trade Commission ban on some of the tech giant’s products, stepping into a long-running patent dispute between Samsung and Apple.
Meat processor and marketer Tyson Foods rose 4.1 percent after earnings bested analyst estimates by 9 cents at 69 cents a share. The company also signaled that 2013 revenues would be above market expectations.
Semiconductor and wireless technology producer Qualcomm slipped 0.8 percent after Piper Jaffray cut its rating on the firm on concerns about softening high-end smartphone demand.
Industrial and construction tool supplier Fastenal dropped 1.9 percent after monthly sales showed an increase of 2.9 percent in July compared with last year, below the 5 percent expected, according to a Credit Suisse note.
Bond prices fell. The yield on the 10-year US Treasury rose to 2.64 percent from 2.60 percent last Friday, while the 30-year increased to 3.73 percent from 3.69 percent. Bond prices and yields move inversely.