US stocks fell for a second day, correcting the biggest annual rally for the Standard & Poor’s 500 Index since 1998, as investors focused on comments from Federal Reserve officials on stimulus and the economy’s strength.
The S&P 500 dropped less than 1 point to 1,831.37 at 4 p.m. in New York. The Dow Jones Industrial Average advanced 28.64 points, or 0.2%, to 16,469.99. Close to 5.3 billion shares changed hands on US exchanges, 11% below the 30-day average.
Federal Reserve Chairman Ben Bernanke was positive in his comments for the US economy during a speech at the American Economic Associations annual meeting.
Bernanke said: “The headwinds I have mentioned may now be abating”. “The aftereffects of the housing bust also appear to have waned.”
Fed policy makers would most likely continue stimulus reductions because improvements in the job market are meeting the central bank’s objectives, Richmond Fed President Jeffrey Lacker said today at a Maryland Bankers Association forum in Baltimore.
The Federal Open Market Committee, will meet on January 28-29, and will probably reduce its purchases in $10 billion steps over the next seven meetings before ending them in December.
In corporate news, investors will be looking ahead to corporate-earnings reports, which will begin next week. Analysts predict earnings for S&P 500 companies in the fourth quarter grew by 5.2%.
Early-December vehicle-sales reports showed growth was softer than the gains seen in recent months. Ford Motor edged 0.5% higher after it recorded a 1.7% increase in total light-vehicle sales last month, while Chrysler reported a 6% increase. General Motors dropped 3.4% after reporting a 6.3% decrease, when analysts expected a rise.
FireEye FEYE soared 38.6% after the Silicon Valley maker of security software said Thursday it will buy closely held Mandiant, a computer-security firm known for outing Chinese hackers, for $1 billion.
General Motors declined 3.4% to $39.57. The carmaker reported December sales plunged 6.3% while analysts estimated on average sales would rise.
T-Mobile US Inc. lost 3.3% to $32.28. AT&T Inc. is targeting customers of smaller rival T-Mobile by offering customers of the fourth largest US carrier as much as $450 in credits for devices and services for each line they switch. AT&T fell 0.4% to $34.80.
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