US stocks retreated amid Fisher comments about stimulus

U.S. stocks fell from record highs as investors focused on data showing stronger than forecast growth in service industries and a Federal Reserve official’s comment that the central bank is closer to slowing its monthly bond buying.

The Standard & Poor’s 500 Index sank 0.1% to 1,707.14 at 4 p.m. in New York. The Dow Jones Industrial Average lost 46.23 points, or 0.3%, to 15,612.13. Nasdaq composite remained almost unchanged.

“The comments today and the data today are not sufficient to say the Fed is really going to ramp down more aggressively,” Walter Todd, the chief investment officer of Greenwood Capital Inc. in Greenwood, South Carolina, said by phone to Bloomberg. “More than anything it’s just people taking a break, catching their breath after a very aggressive run in the market.”

Fed Bank of Dallas President Richard Fisher, who have been criticizing stimulus earlier this year, warned investors not to rely on the central bank’s $85 billion in monthly bond purchases.

“Financial markets may have become too accustomed to what some have depicted as a Fed ‘put,’” or the idea that the central bank will loosen credit after a market decline, Fisher said in a speech in Portland, Oregon. “Some have come to expect the Fed to keep the markets levitating indefinitely. This distorts the pricing of financial assets” and can lead to “serious misallocation of capital.”

Stocks raised 1.1% last week sending S&P 500 index to fresh highs over 1,700 as central banks promised to maintain stimulus till data showed sustainable growth in economic indicators. The benchmark index rose 20% this year comparing with an average of 13.9% for the last 5 years.

In corporate earnings, Qualcomm lost 0.8% to $66.25 today. Piper Jaffray cut its rating on the largest seller of semiconductors for mobile phones to neutral from overweight, meaning that investors should not buy more of the shares. The brokerage cited weaker demand for the parts used in the most expensive smartphones.

J.C. Penney Co. slumped 3.2% to $13.82, falling for a fifth straight session to the lowest level since February 2001. The stock has tumbled 16% in the past week.

Facebook Inc. added 3% to $39.19 after a Piper Jaffray analyst raised his price target to $46 from $38. The operator of the world’s largest social network may gain revenue from video ads, analyst Gene Munster wrote in a note to clients. Facebook shares rose above their initial public offering price of $38 last week for the first time since its first trading day on May 18, 2012. The stock has surged 48% since the company said July 24 that mobile advertising revenue grew in the second quarter.

Washington Post Co. raised by 3.7% to $589.98 at 4:53 p.m in New York. Amazon.com Inc. Chief Executive Officer Jeff Bezos agreed to buy the Washington Post newspaper for $250 million from the company, vaulting the e-commerce magnate into the struggling newspaper industry.

Homebuilders fell 1.9% as a group, with PulteGroup Inc. and D.R. Horton Inc. dropping more than 2%.

At 1:30 London time, US trade balance is expected by investors to be issued and would be influencing dollar price, especially US dollar-to-Canadian dollar currency as Canadian trade balance is also due at the same hour.