US stocks fell yesterday, led by financials in a late-stage sell-off, after the Federal Reserve gave a more pessimistic view on the economy, tempering hopes for a quick recovery.<br /><br />The Fed cut its 2009 forecast for gross domestic product and raised its outlook for unemployment, tempering the recent optimism that the economy might be turning the corner.<br /><br />Financial shares had led the market higher in morning trading after a successful share offering from <strong>Bank of America</strong> boosted optimism about the sector, but they reversed course as investors booked profits. Shares of <strong>Goldman Sachs</strong> fell 3.3 per cent to $136.44 and <strong>JPMorgan</strong> lost 3.5 per cent to $34.55. The <strong>KBW</strong> bank index lost 2.7 per cent.<br /><br />“It sounds as though they (the Fed) are a little less excited about the economy than they were originally or as we were led to believe,” said Paul Nolte, director of investments at Hinsdale Associates. “It’s certainly not encouraging of the green shoots that everybody else is talking about.”<br /><br />Technology shares were also a negative as <strong>Hewlett-Packard</strong>, the world’s biggest PC maker tempered its outlook for 2009. The stock fell 5.22 per cent to $34.67 and was the biggest drag on the Dow.<br /><br />The Dow Jones industrial average fell 52.57 points, or 0.62 per cent, at 8,422.28. The Standard & Poor’s 500 Index lost 4.64 points, or 0.51 per cent, at 903.49.<br /><br />The Nasdaq Composite Index was off 6.70 points, or 0.39 per cent, at 1,727.84.<br /><br />Energy stocks also lost ground even as crude oil surged. Shares of <strong>Exxon Mobil</strong> fell 1.3 per cent to $69.61 and was among the Dow’s top drags.<br /><br />But stocks considered to be defensive plays were among gainers, including consumer staples and healthcare.<br /><br /><strong>McDonald’s</strong> rose 4.4 per cent to $56.25 and was the biggest boost to the Dow after Deutsche Bank recommended a “buy” on the world’s biggest fast-food chain. <strong>Procter & Gamble</strong>, the maker of Tide laundry detergent and Pampers nappies, rose 2 per cent to $54.02 after Barclays raised the stock to “overweight.”<br /><br />On the healthcare front, <strong>Merck & Co</strong> rose 1.2 per cent to $26.09, making it one of the standouts on the Dow.<br /><br />On Nasdaq shares of big cap tech stocks were among the top drags following the disappointment from <strong>Hewlett-Packard</strong>, a technology bellwether. <strong>Apple</strong> fell 1.2 per cent to $125.87, while <strong>Google</strong> fell 0.4 per cent to 397.18.