This Day On The Street
Continue to site
ADVERTISEMENT
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 Decline as Tepid Growth Combines With Fed Jitters

NEW YORK ( TheStreet) -- Major U.S. stock averages on Friday retreated after tepid industrial output and consumer sentiment reports dampened investor sentiment ahead of next week's Federal Reserve policy statement.

The S&P 500 fell 0.6% to close at 1,626.73. The Dow Jones Industrial Average slipped 0.7% to 15,070.18 while the Nasdaq lost 0.63% to 3,423.56.

"I think that fake rally of yesterday was predicated on yet another rumor about what [Chairman] Ben Bernanke is going to say or do next week," said Jeffrey Sica, chief investment officer of Sica Wealth Management. "We're getting profit-taking before the weekend after the rally of [Thursday] anticipating that maybe there could potentially be some more negative information coming out."

While many investors are sharply focused and anxious about what the Fed might reveal about future tapering plans next week, Ethan Harris, co-head of global economics research at Bank of America, said earlier this week that the U.S. central bank would really only begin to taper after strong, sustained evidence that the economy is on solid ground. But even then, the Fed wouldn't suddenly go from $85 billion of monthly bond purchases to zero.

"The Fed will make it [tapering] as smooth as possible," he said. "There's no rush here."

"It's not like the economy is collapsing," Harris added. "But we aren't starting to accelerate yet."

A lackluster industrial output report released before the market open showed that the U.S. remains vulnerable to weakness in the world economy. The Federal Reserve reported that industrial production was unchanged in May, vs. expectations of a 0.2% increase, after falling by an upwardly-revised 0.4% in April. A drop in utilities output was offset by a rise in mining output during the period. Capacity utilization rose to a less than expected to 77.6% from a downwardly-revised 77.7%. Economists were generally expecting a rise to 77.9% last month.

The University of Michigan Consumer Sentiment report came in less than expected at 82.7 in June; economists were expecting 84.5, the same as the prior month.

Inflation pressures appeared to remain relatively subdued in May. The Bureau of Labor Statistics reported early Friday that the producer price index gained by a greater than expected 0.5% in May after falling 0.7% in April. Economists, on average, expected the PPI to increase 0.1%. The core PPI held steady at 0.1%, as expected.

Written by Andrea Tse and Joe Deaux 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
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
ELN $0.00 0.00%
GME $41.71 -0.24%
TWC $188.08 1.52%
WMB $47.35 0.30%
AAPL $110.37 0.00%

Markets

Chart of I:DJI
DOW 16,374.76 +23.38 0.14%
S&P 500 1,951.13 +2.27 0.12%
NASDAQ 4,733.4970 -16.4820 -0.35%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs