US stocks drop for a fifth day, signaling the Standard & Poor’s 500 Index would most likely wrap a week of a declines, after improving economic data boosted bets the Federal Reserve will decrease its monthly bond purchases sooner than estimated.
The S&P 500-stock index dropped 7.78 points, or 0.4%, to 1785.03. The Nasdaq Composite Index slipped 4.84 points, or 0.1%, to 4033.16. The Dow fell 68.26 points, or 0.4%, to 15821.51, with the blue chips notching their first five-session losing streak since September. Thursdays decline puts in jeopardy the Dows streak of eight consecutive weekly gains. The Dow is off 1.6% this week.
“The numbers today pave the way for the Fed” to cut stimulus, Matthew Kaufler, a portfolio manager at Federated Investors Inc. in Rochester, New York, said by phone for Bloomberg. “There’s angst in the short run, but I think it’s only positive in the long run that the Fed begin to taper and extricate itself from being the ultimate market maker.”
Gross domestic product climbed at a 3.6% annualized rate, up from an initial estimate of 2.8% and the strongest since the first quarter of 2012. A separate report showed applications for U.S. employment benefits decreased to 298,000 in the week ended November 30. The median forecast of 41 economists surveyed by Bloomberg called for an increase to 320,000. A series of better-than-expected readings from the labor market and factory data have revived concerns that the Fed could start reducing its $85-billion-a-month bond-purchase program as early as this month.
In corporate world, J.C. Penney lost 8.4% to $8.85, extending its two-day slide to 12%. Bass’s Hayman Capital Management LP said he sold his stake. Hayman in September disclosed it owned about 5.2% of the stock outstanding at the time.
Safeway Inc. slumped 4.6% to $32.64. Jana Partners cut its stake in the grocery chain to about 4.1%. The investor reported a 6.2% holding in the retailer on September 17.
Electronic Arts Inc. tumbled 6% to $21.01 for the steepest drop in the S&P 500. Pacific Crest analyst Evan Wilson said potential delays releasing a new version of the “Battlefield” game franchise may hurt results.
Dollar General Corp. increased 6.1% to $59.81 for the biggest gain in the S&P 500, after raising its full-year earnings forecast. The discount retailer reported third-quarter profit of 72 cents per share, beating analyst estimates of 70 cents per share in the quarter.
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