U.S. Stocks Drop As Investors Await Fed Meeting
--Stocks fall after notching biggest three-day gain since January
--Europe markets slip amid disappointing industrial production data; Asia mostly higher
--Jobless claims fall steeply with two states missing from the data
By Kaitlyn Kiernan
NEW YORK--Stocks dropped Thursday, pausing after seeing the biggest three-day gain since the beginning of the year.
The Dow Jones Industrial Average dropped 43 points, or 0.3%, to 15283 in midday trade. Hewlett-Packard and JPMorgan Chase led declines in the blue-chip index. On Wednesday, the Dow rallied 136 points, to bring its three-day total gain to 404 points, the biggest three-day rally since Jan. 3.
The S&P 500 index lost seven points, or 0.4%, to 1682, led by declines in the materials sector. The Nasdaq Composite Index fell 10 points, or 0.3%, to 3715. The S&P 500 stretched its win streak to seven sessions Wednesday.
"We're not seeing the same momentum of the past few days," said Jonathan Corpina, senior managing partner with brokerage firm Meridian Equity Partners Inc. "With no real major news moving the market, investors with short-term positions are taking the opportunity to take some profits off the table."
The Labor Department reported that the number of new jobless claims fell to the lowest level since 2006 last week, but attributed much of the decline to missing claims from two states. Initial claims for jobless benefits in the latest week fell to 292,000, well below expectations for a rise to 330,000. The Labor Department said two states made changes to their computer systems that resulted in some claims not being processed in time.
Meanwhile, import prices were unchanged in August. Economists had expected a gain of 0.5%.
The flat reading on import prices suggests inflation remains under control, "giving the Fed greater leeway" in its decision next week on whether to begin reducing its economic-stimulus measures, said Peter Jankovskis, co-chief investment officer at OakBrook Investments in Lisle, Ill., which oversees about $3.5 billion.
The Fed will meet on Tuesday and Wednesday next week to discuss the state of the U.S. economy and the fate of the central bank's $85-billion-a-month asset-purchasing program.
At 2 p.m. EDT, a report on the federal budget for August is expected to show a deficit of $150 billion.
The market has been boosted recently by a combination of reduced tensions over Syria, improving economic data out of Europe and China and expectations that the Federal Reserve won't be as aggressive in winding down stimulus measures as previously thought given recent lackluster employment data.
"The upward trajectory is in place," said Dan Veru, chief investment officer at Palisade Capital Management, which has about $4.2 billion of assets under management. "The global growth story, led by the U.S., is now reinforced by China and a little by Europe."
But that upward move can't continue without some bumps in the road, he said. Regardless of what happens over the next couple weeks, he said he thinks stocks will finish the year higher than they are now.
"People were worried about September, so there was a lot of selling in August, but now that September has had a nice run, there is some more optimism," said Bruce Bittles, chief investment strategist at R.W. Baird, which has client assets of more than $100 billion. Mr. Bittles has been recommending sectors sensitive to economic growth, including industrials, materials and consumer discretionary.
But now, with the S&P 500 up 3.4% this month through Wednesday, the market is facing some technical resistance, he said.
European markets slipped after data showing euro-zone industrial production in July fell 1.5% on the month, compared with expectations of a 0.1% rise. The Stoxx Europe 600 dropped 0.1% from Wednesday's five-year closing high.
Asian markets were mostly higher, backed by a strong U.S. session on Wednesday, with China's Shanghai Composite rising 0.6% to a three-month high. Japan's Nikkei, however, eased 0.3% as a strengthening of the yen weighed on exporter shares.
October crude-oil futures added 1.3% to $108.91 a barrel, while September gold futures fell 2.5% to $1,330.20 an ounce amid. The dollar lost ground against both the yen and the euro.
In corporate news, Apple edged up after dropping 7.6% over the past two sessions amid disappointment over the new product launches. Billionaire activist investor Carl Icahn said on CNBC late Wednesday that he increased his position in Apple because he believed the stock was cheap.
Lululemon slumped after the maker of yoga gear provided a fiscal third-quarter earnings and revenue outlook that was below current analyst projections, and trimmed its full-year outlook, overshadowing better-than-expected second-quarter results.
Pandora Media jumped after naming Brian McAndrews, a former aQuantive and Microsoft executive, as its chief executive and chairman. The move comes six months after Joe Kennedy said he would be stepping down from the Internet-radio firm's helm.
SeaWorld Entertainment rose after reporting revenue and admissions through August in the current fiscal year have risen from year-earlier levels, growing during the critical summer season despite some challenging weather conditions.
Men's Wearhouse dropped after the company reported quarterly earnings that missed expectations and lowered its full- year guidance. The quarterly results were hurt by several one-time charges and a shift in quarterly tuxedo rental revenue.
Write to Kaitlyn Kiernan at email@example.com and Tomi Kilgore at firstname.lastname@example.org
Corrections & Amplifications
This item was corrected at 1334 GMT because it misstated the Stoxx Europe 600 finished at a five-year closing low Wednesday. It actually finished at a five-year closing high.
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