Stocks slip as Federal Reserve meeting begins
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.
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