Stocks slip as Federal Reserve meeting begins

STEVE ROTHWELL, AP Business Writer
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Dec. 16, 2013: Specialist William Geier, left, works on the floor of the New York Stock Exchange.  (AP Photo/Richard Drew)

Dec. 16, 2013: Specialist William Geier, left, works on the floor of the New York Stock Exchange. (AP Photo/Richard Drew)

NEW YORK (AP) — Stocks edged lower in early afternoon trading Tuesday as the Federal Reserve begins a two-day policy meeting.

Good news on the U.S. economy this month, including a blockbuster jobs report and a budget deal in Washington, appeared to increase the likelihood that the Fed could pare back its huge bond-buying program as early as this week. Investors find out Wednesday, at the end of the Fed’s last meeting of the year.

KEEPING SCORE: The Standard & Poor’s 500 index fell four points, or 0.3 percent, to 1,781 as of 1:32 p.m. Eastern time. The Dow Jones industrial average fell 17 points, or 0.1 percent, to 15,867. The Nasdaq composite fell three points, or 0.1 percent, to 4,026.

REVENUE FEED: Facebook hit a record high of $55.18 after it tested video advertisements for users’ news feeds, a potential source of revenue.

POSTING GAINS: 3M climbed $3.08, or 2 percent, to $130.74 after raising its dividend by 35 percent. The maker of Post-it notes also forecast solid earnings next year.

THE FED EFFECT: The stock market has surged this year as the Fed keeps buying $85 billion in bonds every month to keep long-term interest rates low. The economy has steadily improved and companies have been making more money. That has helped push the S&P 500 index up almost 25 percent, putting it on track for its best performance in a decade.

ROOM FOR OPTIMISM: The strong economy and healthy earnings provide a good backdrop for stocks, says Liz Ann Sonders, chief investment strategist at Charles Schwab. “Dips that we get are not going to be terribly severe,” Sonders says.

NO CORRECTION: The S&P 500 has gone without a correction, defined as a decline of 10 to 20 percent, since October 2011.

BIGGEST WINNERS: Frontier Communications rose the most in the S&P 500. Shares surged 35 cents, or 8 percent, to $4.75 after the company reached a deal to acquire AT&T’s fixed-line business in Connecticut for about $2 billion.

AND LOSERS: Delta Air Lines fell the most, down 94 cents, or 3 percent, to $26.98.

FLAT PRICES: U.S. consumer prices remained flat in November, held down by falling gas prices. The consumer price index fell 0.1 percent in October.

OTHER MARKETS: The yield on the 10-year Treasury note dropped to 2.85 percent from 2.88 percent on Monday. The price of gold fell $16, or 1 percent, to $1,228 an ounce.

ON DECK: The Fed will also release economic projections and hold a news conference on Wednesday. Several big U.S. companies are due to report quarterly earnings this week, including FedEx, Oracle Corp and Neiman Marcus.

 

Copyright 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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