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U.S. stocks fall on emerging-market jitters; Dow falls 0.26%

Published 01/27/2014, 04:28 PM
Updated 01/27/2014, 04:29 PM
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Investing.com - U.S. stocks fell on Monday amid ongoing fears that emerging-market economies are due to hit a soft patch, while uncertainty over the Federal Reserve's stimulus program also nudged prices lower.

At the close of U.S. trading, the Dow Jones Industrial Average fell 0.26%, the S&P 500 index fell 0.49%, while the Nasdaq Composite index fell 1.08%.

Fears emerging markets are due to cool, especially if the Federal Reserve continues to taper stimulus programs, sent stocks worldwide falling on Monday, with fears that contagion from Turkey and Argentina could spread elsewhere fraying nerves even further.

Last week, a preliminary Chinese HSBC Manufacturing PMI fell to 49.6 for January from 50.5 in December, missing market calls for an uptick to 50.6.

A reading under 50 signifies contraction, and the numbers spooked investors with concerns that emerging-market economies may grow less.

The Federal Reserve will conclude a monetary policy meeting on Wednesday, and investors held firm on expectations that monetary authorities will make fresh cuts to its USD75 billion in monthly bond purchases due to several months of improving U.S. economic indicators.

Stimulus tools such as Fed purchases of Treasury holdings and mortgage debt suppress interest rates to spur recovery, thus sending investors to asset classes like stocks in industrialized and emerging markets.

While talk of tapering the program reflects a view that the economy is improving, it also creates uncertainty as to how stocks will react without a monetary crutch.

Elsewhere, the Census Bureau reported earlier that sales of new, single-family houses in December came in at a seasonally adjusted annual rate of 414,000, missing market calls for a 475,000 reading and also below November's revised figure of 445,000.

The figure was still well above the December 2012 reading of 396,000, and the data also revealed that inventories remain lean and prices continue rising.

Harsh winter weather may have affected sales in December as well.

On the earnings front, earthmover Caterpillar released quarterly results that beat expectations, while markets were eager to see Apple's earnings after the closing bell.

Leading Dow Jones Industrial Average performers included Caterpillar, up 5.86%, United Technologies, up 1.78%, and Merck, up 1.09%.

The Dow Jones Industrial Average's worst performers included Visa, down 2.23%, Microsoft, down 2.05%, and Goldman Sachs, down 1.77%.

European indices, meanwhile, finished lower.

After the close of European trade, the EURO STOXX 50 fell 0.32%, France's CAC 40 fell 0.41%, while Germany's DAX 30 fell 0.46%. Meanwhile, in the U.K. the FTSE 100 finished down 1.70%.

On Tuesday, the U.S. is to release data on durable goods orders, a leading indicator of production, as well as what will be a closely watch report on consumer confidence.


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