New York Report: Wall St falls as fears over Fed tapering weigh

WALL Street stocks fell yesterday pressured by uncertainty about the Federal Reserve’s plans to withdraw stimulus, but European shares rose to 2-1/2-month highs after data showed the Eurozone emerged from recession in the second quarter.

The euro slipped despite the encouraging euro zone economic data as higher US bond yields buoyed the dollar, while sterling jumped after robust UK jobs data cast doubt on the Bank of England’s pledge to keep interest rates low.

European stock markets have outperformed their US counterparts lately as signs grew that the region’s economy has finally turned the corner. But they are still lagging US shares, which have hit record highs for the year to date.

“There is some talk of global money arriving in Europe asEurope claws its way out of recession,” said Rupert Baker, a European equity sales executive at Mirabaud Securities.

In the United States, uncertainty about when the Fed will start scaling back its stimulus program has kept stocks under pressure. Recent economic indicators have presented a mixed view of growth and inflation, complicating predictions of the Fed’s next policy action.

The Dow Jones industrial average dropped 113.35 points, or 0.73 per cent, to end at 15,337.66. The Standard & Poor’s 500 Index fell 8.77 points, or 0.52 per cent, to close at 1,685.39. The Nasdaq Composite Index dropped 15.17 points, or 0.41 per cent, to 3,669.27.

Retail stocks were among the day’s top decliners after Macy’s reported a sales and profit miss in the second quarter and cut its full-year earnings forecast. Apple was one of the biggest gainers of the day, hitting $500 a day after investor Carl Icahn tweeted that he had built a “large position” in the firm.