New York Report: Taper paranoia sees US stocks losing ground

US STOCKS fell yesterday as retail sales rose solidly in November, adding to signs the economy is strong enough for the Federal Reserve to begin reducing the pace of monetary stimulus.

Profit-taking also played a part in the market’s decline, with investors selling some stocks to lock in gains from this year’s rally. The S&P 500 is set to close its strongest yearly performance in more than a decade.

“Year-end activity is clouding reactions to some economic news,” said Drew Wilson, an analyst at Fenimore Asset Management in Cobleskill, New York.

He said the market is “taper-schizophrenic” as it tries to second-guess the Fed’s reaction to recent economic data. “I’m not sure the market knows how to react to good and bad news.”

Facebook, however, closed at its highest since 25 October a day after it was selected to join the S&P 500 index. The change becomes effective after the close on 20 December.

In yesterday session, the social network’s stock jumped five per cent to end at $51.83 and helped cap the Nasdaq’s loss.

The Dow Jones industrial average fell 104.10 points or 0.66 per cent, to end at 15,739.43. The S&P 500 lost 6.72 points or 0.38 per cent, to finish at 1,775.50. The Nasdaq Composite dropped 5.41 points or 0.14 per cent, to close at 3,998.403.

The Fed’s policy-setting committee is scheduled to meet for the last time this year on Tuesday and Wednesday next week. The market is expected to be more volatile ahead of the meeting, as investors speculate on the outcome.