End-of-the-month profit-taking took stock prices lower Thursday. However, the major stock market indexes posted strong gains for October.
The Dow Jones Industrial Average dropped 73.01 points to 15545.75. The Nasdaq Composite Index fell 10.91 points to 3919.71 and the S&P 500 stock index was off6.77 points to 1756.54.
For the month, The S&P 500 was up 4.5 percent, the Nasdaq gained 3.9 percent and the Dow added 2.8 percent.
Most of the Thursday decline came at the end of the session on suggestions the Federal Reserve may be ready to begin removing economic stimulus before the end of the year. The next meeting of the Fed will be in the middle of December.
Oil prices fell again Thursday, down 39 cents to $96.38 a barrel and fell 5.8 percent in October. Gold dropped $25.60 to $1,323.70 an ounce. Over the past two months gold has decline 5.3 percent.
Facebook Inc. (Nasdaq: FB) and Exxon Mobil Corp. (NYSE: XOM) jumped more than 0.9 percent after earnings topped estimates. Boeing Co. (NYSE: BA) advanced 0.6 percent after saying it would step up production of its 737 jets.
“The market is re-rating expectations to maybe earlier Fed tapering than consensus,” Andres Garcia-Amaya, New York-based global market strategist at JPMorgan Chase & Co.’s (NYSE: JPM) mutual funds unit, said in a phone interview Thursday. His firm oversees $400 billion. “The Fed was a little bit more hawkish than people expected, not a lot, but incrementally more hawkish.”
The S&P 500 fell 0.5 percent from a record yesterday, halting four days of gains, as the Fed fueled bets it may begin to cut stimulus. The central bank maintained $85 billion in monthly bond purchases, saying that while the economy shows signs of “underlying strength” it needs to see more evidence of sustainable improvement.
Economists at Citigroup Inc. (NYSE: C) and Barclays Plc (NYSE: BCS) said Wednesday’s Fed policy statement opens the possibility of reduced bond purchases as soon as December. The odds of a taper in January rose to 45 percent, from 25 percent before the decision, according to Citigroup. Economists surveyed Oct. 17-18 by Bloomberg had predicted the Fed would begin paring stimulus in March.
“We don’t expect anything really before the March time frame,” David Roda, the Miami-based regional chief investment officer for Wells Fargo Private Bank, said in a phone interview. His firm manages $170 billion. “Even though the jobs data is slowly improving, the pace of improvement has slowed and the quality of job growth is certainly not that great.”
Fed stimulus has helped propel the S&P 500 higher by more than 160 percent from a 12-year low in 2009. The gauge surged 4.5 percent in October, for the biggest monthly gain since July, as lawmakers ended a 16-day government shutdown and agreed to extend the U.S. borrowing authority, avoiding a possible debt default.
Avon (NYSE: AVP) tumbled 22 percent, the most since 1999, to $17.50. The world’s largest door-to-door cosmetics seller posted a third-quarter net loss, while its profit excluding some items fell short of analyst estimates.
Avon and the government have investigated whether former employees in China and other countries bribed officials in violation of the Foreign Corrupt Practices Act. The Securities and Exchange Commission offered a settlement last month with monetary penalties that were “significantly greater” than the $12 million the company had offered, Avon said in a filing today.
Computer Sciences Corp. (NYSE: CSC) lost 4.5 percent to $49.26. The provider of technology consulting to governments and companies signaled that a probe by the SEC is escalating.
As part of an almost three-year investigation by the SEC, former U.S. executives, along with some current employees outside the country, have received Wells notices from the commission, CSC said Thursday in a filing. The SEC sends a Wells notice to notify that investigators may recommend an enforcement action.
JDS Uniphase (Nasdaq: JDSU) fell 11 percent to $13.09. The provider of network analytics for the telecommunications and broadband industries was cut to "hold" from "buy" at Jefferies by equity analyst James Kisner after forecasting sales below analyst estimates for this quarter.
Exxon rose 0.9 percent to $89.62 for the biggest gain in the Dow. The largest oil company by market value lifted production for the first time in more than two years and reported third-quarter profit that beat analyst estimates.
Facebook advanced 2.4 percent to $50.21, reversing a decline of as much as 5.1 percent, after the operator of the world’s largest social network yesterday reported third-quarter profit that beat analyst estimates.
The shares slid earlier after Facebook said younger teens aren’t using its website as much as they used to and it will limit its news feed advertisements that have driven revenue gains.
Pivotal Research Group LLC upgraded the shares to "buy" from "hold," saying Facebook retains its advantage in ad sales and the negative reaction to comments about lower teen use was overdone.
Boeing gained 0.6 percent to $130.50. The world’s largest plane-maker plans to speed the monthly production tempo of its best-selling 737 jets by 24 percent to 47 a month by 2017, the highest rate ever.
Expedia Inc. (Nasdaq: EXPE) rallied 18 percent to $58.97. Adjusted earnings were $1.43 per share in the third quarter, the online travel company said in a statement, more than the $1.36 predicted by analysts.