Wall St. drops on uncertainty about Fed stimulus

Traders work on the floor at the New York Stock Exchange, May 23, 2013. REUTERS/Brendan McDermid

Traders work on the floor at the New York Stock Exchange, May 23, 2013. REUTERS/Brendan McDermid

NEW YORK - U.S. stocks fell for a third day on Friday, putting indexes on track for their first negative week since mid-April, on lingering concern the U.S. central bank may scale back its support to the economy.

Trading has been choppy in the second half of the week as market participants assess the Federal Reserve's evolving stance toward markets. The Fed's stimulus measures have been instrumental in a rally that has driven U.S. stocks to record highs this year.

"We've had some volatility this week that we really haven't experienced in a month or so, so it's got a little bit of uncertainty here," said Joe Bell, a senior equity analyst at Schaeffer's Investment Research in Cincinnati.

Friday may also be a natural time for investors to take profits heading into the long weekend, with markets closed on Monday for the Memorial Day holiday, Bell said.

Even as there is some fear that the Fed will exit too soon, many analysts say the eventual tapering of the central bank's stimulus will come with an expansion of the economy and corporate earnings, which will continue to support equities.

"A lot of people have only been giving the Fed credit for this rally and not been talking about some of the improvement in the labor market or housing data," Bell said.

"The economy in general has been on a lot better footing than perhaps people have given it credit for."

The Dow Jones industrial average .DJI dropped 48.07 points, or 0.31 percent, to 15,246.43. The Standard & Poor's 500 Index .SPX dropped 7.91 points, or 0.48 percent, to 1,642.60. The Nasdaq Composite Index .IXIC dropped 17.00 points, or 0.49 percent, to 3,442.42.

The three major U.S. stock indexes were on track to post their first negative week in five.

Procter & Gamble (PG.N) shares rose 3.8 percent to $81.68 after the world's largest household products maker brought back A.G. Lafley as chief executive Thursday, replacing Bob McDonald in the midst of a major restructuring.

reuters_logoBy Leah Schnurr | Fri May 24, 2013 11:44am EDT

[button-black text="FULL STORY" Full Story" url="http://www.reuters.com/article/2013/05/24/us-markets-stocks-idUSBRE93006T20130524"]


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