NEW YORK: Stocks retreated Thursday following five successive records for the Standard & Poor’s 500 Index, as the Federal Reserve Bank of Philadelphia President Charles Plosser said he favors scaling back the central bank’s pace of economic stimulus.
Utility and telephone shares fell the most out of 10 S&P 500 groups. AT&T Inc. sank 1.3 percent, among the biggest declines in the Dow Jones industrial average. Monster Beverage Corp. dropped 5.2 percent after the chief executive officer said sales growth in April slowed. Precision Castparts Corp. jumped 7.6 percent for the biggest S&P 500 gain after posting earnings that topped projections.
The S&P 500 declined 0.4 percent to 1,626.67. The Dow fell 22.50 points, or 0.2 percent, to 15,082.62.
“The market’s scared about what that would bring for equities as we are so addicted to stimulus,” Rick Fier, director of equity trading at Conifer Securities LLC in New York, said in an email on the potential for the Fed to taper stimulus soon. His firm oversees $8 billion in assets. “This is why the market is only going up, so any change will make people nervous. It will create more volatility and opportunities going forward.”
Plosser said he favors reducing the monthly $85 billion bond purchases as early as the next Federal Open Market Committee meeting, scheduled June 18-19. He said unemployment will fall to 7 percent at the end of this year.
Plosser’s remarks highlight a debate on whether to expand or curb the pace of stimulus that has pumped the central bank’s balance sheet to $3.32 trillion.
Applications for unemployment insurance payments unexpectedly dropped last week, and the average over the past month fell to the lowest level since before the last recession.
Among stocks in the news, Tesla Motors soared $13.61, or 24 percent, to $69.40, after the electric car maker posted its first quarterly net profit since it was founded a decade ago.