Small-cap Selloff Resumes As Us Stocks Retreat
US stocks retreated today, after benchmark indexes closed at all-time highs for a second consecutive day, and amid a renewed selling in small-cap and Internet shares.
By Paolo Palazzi-Xirinachs
Wednesday, May 14, 2014
Groupon sank 4.6% to lead the Dow lower by 1.1%, Fossil Group Inc. fell 8.9% after the maker of watches and accessories forecast earnings that trailed analysts’ estimates, Deere & Co. slid 2% after cutting its full-year revenue projection and IBM lost 1.6% to pace declines among large companies. Just after 3PM in New York the S&P 500 had dropped 0.5% to 1,888.66. The Dow lost 95.27 points, or 0.6%, to 16,620.17, halting a five-day rally, and the Russell 2000 Index of small stocks sank 1.4% after yesterday sliding 1.1%.
Benchmark government bond yields in both the United States and Germany fell this afternoon after sources said a European Central Bank rate cut next month is "more or less a done deal.” Euro zone sources said the ECB plans a package of policy options, including measures aimed at boosting lending to small- and mid-sized firms. The ECB's dovishness has helped hold down yields on German and US debt, though the expectation is stronger US growth will result in a rise in those yields over time.
Federal Reserve Chair Janet Yellen will speak tomorrow after saying last week the world’s biggest economy still requires a strong dose of stimulus. She told US lawmakers that while data shows “solid growth” in the second quarter, “many Americans who want a job are still unemployed” and inflation remains low. Three rounds of monetary stimulus have helped fuel economic growth, sending the S&P 500 surging as much as 180% from its 2009 low. Macy’s Inc., Wal-Mart Stores Inc. and Kohl’s Corp. are among 12 companies in the S&P 500 scheduled to disclose results this week, giving investors insight into how retailers performed during the winter months.
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