NEW YORK - Stocks headed lower Tuesday as investors continued to worry about the Federal Reserve winding down its economic stimulus program and weak consumer spending in the U.S.
The Dow Jones industrial average lost
115 points, or 0.7 percent, to 15,894 as of noon ET. The Standard &
Poor's 500 index fell nine points, or 0.5 percent, to 1,792 and the Nasdaq
composite fell 13 points, or 0.3 percent, to 4,032.
Companies that depend heavily on
consumer spending had some of the biggest losses. GameStop, the video game
retailer, sank $1.47, or 3 percent, to $45.51, one of the worst declines in the
S&P 500 index. Amazon.com fell $7.17, or 2 percent, to $385.10.
The Dow is headed for its first
three-day losing streak in two months.
Investors are waiting for several
economic reports later this week that could influence whether the Fed will pare
back its $85 billion-a-month bond-buying program, which is designed to keep
interest rates low and stimulate the economy.
On Friday, the government will release
its monthly job market survey, one of the most closely watched indicators of
the U.S. economy. Economists expect that employers created 180,000 jobs last
month while the unemployment rate remained steady at 7.2 percent, according to
FactSet, a financial information provider.
Investors have been seeing some
encouraging economic news recently. A trade group reported Monday that
manufacturing was growing in the U.S. at the fastest pace in two and a half
years. The group also said factories were hiring at the quickest rate in 18
A strong economy is good for corporate
profits, and by extension the stock market, over the long term. But if the
economy is getting closer to full strength, that means the Federal Reserve
could have all the more reason to pull back its stimulus program, which has
been supporting financial markets. The Fed's huge bond-buying program has been
giving investors an incentive to buy stocks by making bonds look more expensive
"The concern in the near term is
that, since the economic data is picking up steam, the Fed could pull back as
soon as January," said Alec Young, global equity strategist with S&P
The market has had huge gains this
year, and investors may be selling some of their holdings to reduce the risk of
losing money if stocks reverse course and turn lower. The S&P 500 index has
soared 26 percent, and the Nasdaq is up 34 percent. The Dow and S&P 500 are
trading near record highs.
On Thursday investors will have other
important economic news to consider, an updated report on U.S. economic growth.
Economists expect the economy expanded at a 3.2 percent annual rate last
A key worry for investors these days
is how willing U.S. consumers are to spend, especially with the holiday
shopping season getting underway.
The National Retail Federation said
Monday that a record number of consumers went shopping over the four-day
Thanksgiving weekend. However, the average amount spent by each shopper fell
compared with the same period last year, the first decline since the trade
group began tracking the figures in 2006.
In company news:
Yum Brands fell $2.11, or 3 percent,
to $75.60. The owner of KFC and Taco Bell said sales in China, a key market for
the company, have been sluggish because of concerns among Chinese customers
about food safety.
Abercrombie & Fitch rose $2.28, or 7 percent, to $36.31. The stock of the teen clothing store owner rose after an activist shareholder, Engaged Capital, sent a letter to the company demanding that CEO Michael Jeffries be replaced.