NEW YORK: U.S. stocks fell Friday, paring the seventh monthly gain for the Standard & Poor’s 500 Index, as better-than-forecast data on business activity and consumer confidence bolstered concern the Federal Reserve will scale back stimulus.
All 10 groups in the S&P 500 retreated, as health-care, energy and consumer staple stocks led declines. Pall Corp. retreated 5.1 percent after lowering an earnings forecast. American International Group Inc. slid 3.8 percent after saying it hasn’t received a deposit in the sale of its plane-leasing unit. Monsanto Co. fell 4.1 percent after an unapproved, genetically modified strain of wheat was discovered growing.
The S&P 500 fell 1.4 percent to 1,630.74 after rising as much as 0.3 percent earlier. The Dow Jones industrial average lost 208.96 points, or 1.4 percent, to 15,115.57.
“May will be the seventh month in a row where the S&P 500 has traded higher, and the markets are maybe looking for a reason to pause or consolidate,” said Jim Russell, a senior equity strategist in Cincinnati at U.S. Bank Wealth Management, which oversees about $110 billion in assets. “We wouldn’t be surprised to see the market trade sideways to down in the weeks ahead on, call it, slow summer months, questions around Fed tightening and perhaps sluggish earnings growth in the second quarter.”
Changes by MSCI Inc. to its global and U.S. equity indexes were implemented at the close of trading Friday, a process that can lead to swings in affected stocks. The additions and deletions of stocks, known as rebalancing, to gauges such as the MSCI All-Country World Index and the MSCI World Index of developed-market equities were announced on May 15.
The S&P 500 retreated Friday after consumer confidence advanced in May to the highest level in almost six years. Separate reports showed business activity rebounded after declining for the first time in more than three years in April. Consumer spending unexpectedly declined last month.
The data renewed concerns that the Fed would curtail its $85 billion in monthly bond purchases after Chairman Ben S. Bernanke said last week the central bank could reduce monetary stimulus, known as quantitative easing, if officials see signs of sustained improvement.
“If the data comes in strong, it really reinforces the message that the Fed has been delivering over the past few weeks and probably justifies the tapering of QE,” said Joseph Tanious of JPMorgan Funds.
Friday’s decline left the S&P 500 down 1.1 percent in the past four trading days for the first two-week drop since November. The gauge advanced 2.1 percent in May, the seventh month of gains and longest winning streak since September 2009.