Stocks end lower ahead of Fed meeting

Traders work the floor of the New York Stock Exchange Thurs­day. This week Fed­eral Reserve offi­cials will meet and are expected to announce steps to prop up the ail­ing U.S. econ­omy. (AP Photo/David Karp)

PALLAVI GOGOI

AP Busi­ness Writer

NEW YORK — Stocks slipped on Wall Street as trou­bling eco­nomic news from China and the U.S. out­weighed opti­mism about more stim­u­lus from the Fed­eral Reserve.

The Dow Jones indus­trial aver­age fell 52.35 points to close at 13,254.29 on Mon­day. The Stan­dard & Poor’s 500 slipped 8.84 points to 1,429.08 and the Nas­daq com­pos­ite fell 32.40 points to 3,104.02.

The S&P 500 and Nas­daq were dragged down more than the Dow by a drop in Apple’s stock, the largest com­po­nent of both indexes. Apple, which is expected to announce its new iPhone on Wednes­day, fell $17.70, or 2.6 per­cent, to $662.74.

The stum­ble marks a pause in a rally last week that took the Dow and the S&P 500 to their high­est lev­els in more than four years.

Stock mar­kets rose around the world last week after the Euro­pean Cen­tral Bank announced a long-anticipated plan to sup­port strug­gling coun­tries in the Euro­pean Union.

Investors are hope­ful that the Fed will act this week to sup­port the U.S. econ­omy. The mon­e­tary pol­i­cy­mak­ing body of the Fed­eral Reserve meets on Wednes­day and Thurs­day. Many antic­i­pate a third round of bond pur­chases or other sup­port for the finan­cial system.

Fed­eral Reserve chair­man Ben Bernanke indi­cated in a speech last month that the cen­tral bank is inclined to pro­vide new stim­u­lus to the U.S. econ­omy if it’s needed.

Since the speech, the gov­ern­ment reported weak growth in jobs last month, height­en­ing the case for more stim­u­lus. There have also been new signs that man­u­fac­tur­ing and con­struc­tion are slow­ing down.

On Mon­day, the Fed also reported that Amer­i­cans cut back on their credit card use in July for the sec­ond straight month, sug­gest­ing many remain cau­tious in the face of high unem­ploy­ment and slow eco­nomic growth. Total bor­row­ing dipped $3.3 bil­lion in July from June to a sea­son­ally adjusted $2.705 trillion.

“The econ­omy is not going through a nose­dive, so I’m not sure we need another stim­u­lus,” said John Man­ley, chief equity strate­gist at Wells Fargo Advan­tage Funds. “But Bernanke would rather make a mis­take going in early with stim­u­lus than not, espe­cially since the mar­kets will not tol­er­ate inaction.”

There were also dis­cour­ag­ing news out of China, giv­ing investors more rea­son to worry that one of the most impor­tant engines of the global econ­omy is sput­ter­ing. Auto sales growth slowed in August and imports shrank unex­pect­edly. Fac­tory out­put also slid to three-year low last month. The Chi­nese pres­i­dent warned growth could slow further.

Among stocks that made big moves:

— Sprint Nex­tel climbed 2.4 per­cent after the country’s third-largest cell­phone com­pany was upgraded by an ana­lyst, who said the company’s ongo­ing net­work revamp would save it money. The stock rose 12 cents to $5.15.

— LeapFrog Enter­prises dropped 80 cents, or almost 9 per­cent, to $8.35. The edu­ca­tional toy maker’s Leap­Pad prod­uct will face new com­pe­ti­tion from Toys R Us, which announced plans to launch its own tablet com­puter aimed at chil­dren next month.

— Amer­i­can Inter­na­tional Group fell after the U.S. gov­ern­ment said Sun­day it was sell­ing shares in the insurer that would decrease its hold­ings below a major­ity stake for the first time since the bailout of AIG in 2008. AIG’s stock lost 69 cents, or 2 per­cent, to $33.30.

— Shares of Geron Corp. plunged 56 per­cent after the com­pany announced two set­backs for its exper­i­men­tal can­cer drug. Geron has ended one study and does not expect the drug to suc­ceed in a sec­ond. Its stock fell $1.62 to $1.28.

Posted by AP News on Sep 10 2012. You can follow any responses to this entry through the RSS Feed. Comments can be made below.