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U.S. stocks fall on profit taking; Dow slides 0.06%

Published 06/23/2014, 04:20 PM
Updated 06/23/2014, 04:26 PM
Stocks fall on profit taking, Iraq concerns
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Investing.com - U.S. stocks largely fell on Monday as investors locked in gains from the Federal Reserve's dovish policy language last week and sold for profits.

At the close of U.S. trading, the Dow 30 fell 0.06%, the S&P 500 index fell 0.01%, while the NASDAQ Composite index inched up 0.01%.

The Volatility S&P 500 index, which measures the outlook for market volatility, was up 1.20% at 10.98.

Stocks posted solid gains after the Federal Reserve last Wednesday left benchmark interest rates unchanged at 0.00-0.25% and cut its monthly bond-buying program to $35 billion from $45 billion.

While not a surprise, somewhat dovish language sent stocks gaining, as the U.S. central bank is seen leaving benchmark interest rates unchanged for a while after it closes its stimulus programs.

"It likely will be appropriate to maintain the current target range for the federal funds rate for a considerable time after the asset purchase program ends, especially if projected inflation continues to run below the Committee's 2 percent longer-run goal, and provided that longer-term inflation expectations remain well anchored," the Fed said in its Wednesday policy statement.

By Monday, investors felt stock prices had risen too high and sold for profits despite upbeat U.S. data.

The National Association of Realtors reported earlier that existing home sales hit 4.89 million in May, up 4.9% from April's revised 4.66 million rate and above market calls for 4.73 million units.

Elsewhere, Markit Economic reported that U.S. manufacturing PMI rose to 57.5 in June from 56.4 in May, beating market calls for a 56.1 reading.

Separately, geopolitical concerns dampened demand for equities.

A bloody Sunni insurgency in Iraq steered investors towards safe-haven assets like gold and away from stocks, as fears continued to persist the U.S. will become increasingly involved in the conflict, which could threaten recovery.

Iraqi Prime Minister Nuri al-Maliki has agreed to a July 1 deadline to create a new government, a step required by Washington if Baghdad receives U.S. assistance in battling the insurgents.

Leading Dow Jones Industrial Average performers included J P Morgan Chase & Co (NYSE:JPM), up 1.07%, Microsoft Corporation (NASDAQ:MSFT), up 0.73%, and Verizon Communications Inc (NYSE:VZ), up 0.68%.

The Dow Jones Industrial Average's worst performers included Pfizer Inc (NYSE:PFE), down 1.09%, General Electric Company (NYSE:GE), down 1.06%, and Boeing Company (NYSE:BA), down 0.94%.

European indices, meanwhile, ended the day lower.

After the close of European trade, the DJ Euro Stoxx 50 fell 0.56%, France's CAC 40 fell 0.57%, while Germany's DAX fell 0.66%. Meanwhile, in the U.K. the FTSE 100 fell 0.36%.

On Tuesday, the U.S. is to release private-sector data on consumer confidence, as well as a report on new home sales.

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