Stocks edge lower on Wall Street; Retailers slump
NEW YORK (AP) - Stocks edged lower in early trading Thursday as more positive news on the economy led investors to anticipate that the Federal Reserve is getting closer to reducing its economic stimulus program.
The number of Americans applying for unemployment benefits dropped to the lowest in nearly six years last week, and the U.S. economy grew at a robust 3.6 percent annual rate from July through September, the fastest since early 2012.
A record-setting run for the stock market has stalled in December as several signs of strength in the U.S. economy have emerged. That has led investors to anticipate that the Fed is getting ready to pull back on its huge bond-buying program, which has been supporting financial markets. Investors will get more insight on the economy Friday when the government releases its monthly jobs report.
"If they do cut the bond purchases the knee-jerk reaction for the market will be to move down," said Chris Gaffney, a senior market strategist at EverBank.
The Dow Jones industrial average fell 38 points, or 0.3 percent, to 15,850 in the first hour of trading. The Standard & Poor's 500 index dropped five points, or 0.3 percent, to 1,788. The Nasdaq composite was down three points, or 0.1 percent, at 4,035.
Several retailers fell after reporting disappointing results. L Brands, the owner of Victoria's Secret, Bath & Body Works and other retailers, lost 90 cents, or 1.4 percent, to $62.35 after reporting that its sales dropped 5 percent last month.
The S&P 500 has dipped 1 percent this month, paring its gain for the year to 25.3 percent.
Stocks have surged this year as the Fed's stimulus has helped keep the economic recovery on track and corporations have produced record profits. Low interest rates have also made stocks more attractive compared to bonds.
In government bond trading, the yield on the 10-year Treasury note rose to 2.86 percent from 2.83 percent Wednesday. The yield is the highest it's been in more than two months as traders expect the Fed to reduce its bond purchases. The Fed has been keeping long-term interest rates low by purchasing $85 billion worth of bonds every month.
In commodities trading, the price of oil rose 29 cents, or 0.3 percent, to $97.45 a barrel. Gold fell $24.50, or 2 percent, to $1,222.90 an ounce.
Among other stocks making big moves, Dollar General rose $2.90, or 5.2 percent, to $59.24, after the retailer's earnings topped the estimates of analysts that follow the stock. Dollar General's net income rose as traffic improved and shoppers spent more per transaction.
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