The S&P 500 fell 0.4
percent to 1,676 on Tuesday after eight straight days of gains and a record closing
yesterday. The decline stopped the longest rally in the S&P 500 since
January. The Dow Jones Industrial Average lost 32.41 points,
or 0.2 percent, to 15,451. Almost 5.5 billion shares traded hands on U.S. exchanges
today, which was 15 percent below the three-month average.
The decline comes after
about 74 percent of the 36 S&P 500 companies that have reported so far have
beaten analyst forecasts, according to Bloomberg. Yahoo! Inc. will report after
equity markets close on Tuesday, one of nine companies in the index disclosing
results that day.
The S&P 500’s decline accelerated after Fed
Bank of Kansas City President Esther George said the U.S. was heading toward economic
recovery and that cuts in the pace of stimulus would be appropriate. George also
said inflation appears to be moderate and the benchmark interest rate should
not be held too low for too long.
Her comments came after Fed
Chairman Ben Bernanke bolstered the rally last week after he backed sustained
monetary stimulus. Bernanke will deliver his semi-annual monetary policy report
to Congress this week, starting Wednesday at the House Financial Services
Committee.
The Fed stimulus has
helped fuel a surge in stocks worldwide, with the benchmark U.S. index jumping almost 150 percent from its March 2009 low. Fed
policy makers have been debating the timing and pace of any cuts in the central
bank’s $85 billion in monthly bond purchases. Bernanke has said any reduction
will be tied to sustained improvement in the labor market or an increase in
inflation.
A Labor Department report
today showed the cost of living in the U.S. rose in June, led by a surge in gasoline
prices. With continued unrest in Egypt and production backlogs, gasoline prices
have jumped recently the most they have in four months. The consumer-price
index increased 0.5 percent after a 0.1 percent gain the prior month according to
the report.
Separate data showed that
industrial production rose in June by the most in four months, signaling U.S.
manufacturing is improving heading into the second half of the year. Output at
factories, mines and utilities climbed 0.3 percent, the biggest advance since
February, after being little changed in May.