This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Stocks Drop on Concern Fed to Reduce Stimulus Sooner than Later

NEW YORK ( TheStreet) -- U.S. stocks declined Tuesday on concern the Federal Reserve may cutback its stimulus measures after Kansas City Fed President Esther George warned that current policy may lead to higher inflation and financial instability.

The S&P 500 fell 0.6% to close at 1,631.38.

Speaking in Santa Fe, New Mexico, George questioned whether the Fed's aggressive bond buying is ultimately good for the country's economic recovery.

"Will continuing with current policy and the creation of even greater excess reserves in the banking system result in more lending and economic growth or merely invite asset misallocation?," George said. "In light of improving economic conditions, I support slowing the pace of asset purchases as an appropriate next step for monetary policy."

Similarly, Fed Gov. Sarah Bloom Raskin's speech on job creation in Washington Tuesday afternoon did little to allay concerns the Fed may begin to curb its stimulus measures. Raskin didn't address the future of the bank's monetary policy but did question whether the quality of jobs being created in the economic recovery.

Dollar General (DG - Get Report) was the biggest decliner on the S&P 500, tumbling 9.2% to $48.64 after the discount retailer reported in-line first-quarter earnings of 71 cents a share but slashed its full-year earnings outlook to below Wall Street expectations, driven by slowing sales growth.

Monster Beverage ( MNST ) was the biggest gainer in the index, jumping 10% to $59.60 after CEO Rodney Sacks reasserted at an annual investors meeting Monday that its energy drinks are safe to consume and that sales have improved in the last several months amid new product launches and distributor changes. Still, Sacks cautioned that it was still too early to tell whether sales would continue to improve in the long-run.

ExactTarget (ET) soared 52% to $33.69 while (CRM - Get Report) shares tumbled 7.9% to $37.80., the largest maker of online customer-management software, is buying cloud marketing platform company ExactTarget for $2.5 billion to further strengthen Salesforce's position in cloud marketing services.

The Dow Jones Industrial Average dropped 0.5% to 15,177.54 while the Nasdaq fell 0.6% to 3,445.26.

The Census Bureau reported early Tuesday that the U.S. trade deficit widened by a less than expected $40.3 billion in April from an improved revision to the March deficit figure at $37.1 billion. However, this was mainly a result of the unwinding of the distortion caused by the Chinese Lunar New Year holiday. Economists, on average, were expecting a deficit of $41 billion in April.

Written by Andrea Tse in New York

>To contact the writer of this article, click here: Andrea Tse.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
ET $0.00 0.00%
CRM $73.81 0.00%
DG $82.62 0.00%
MNST $145.95 0.00%
AAPL $93.24 0.00%


Chart of I:DJI
DOW 17,660.71 +9.45 0.05%
S&P 500 2,050.63 -0.49 -0.02%
NASDAQ 4,717.0940 -8.5450 -0.18%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs