New York – Stocks drooped Tuesday after a robust reading on the economy, notes from the most recent meeting of the Federal Reserve and the continuation of a solid earnings season cemented the feeling on Wall Street that additional rate hikes are a near certainty.
The selloff, which followed a higher opening, began after the Conference Board said its Index of Leading Economic Indicators rose sharply in January. The index, a closely watched gauge of future economic activity, is designed to take the pulse of the economy in the near term. It rose 1.1 percent in January, following a 0.3 percent gain in December.
The economic-indicator reading was almost twice as high as analysts expected, providing one more sign that “there’s growth still there in the economy, and the Fed’s going to have to do its magic by continuing to raise interest rates,” said Kim Caughey, equity-research analyst at Fort Pitt Capital Group in Pittsburgh.
Minutes from the most recent meeting of Fed policymakers underscored the point, with Fed governors saying further rate hikes might be needed to keep “continuing upside risks” of inflation in check.
Strong results from Federated Department Stores Inc. and Home Depot Inc. couldn’t distract the market from its interest-rate worries. Less stellar results from Wal-Mart Stores Inc., the world’s largest retailer, further dimmed the mood on the Street.
The Dow Jones industrial average fell 46.26, or 0.42 percent, to 11,069.06. The Dow rose past Thursday’s 4 1/2-year high in opening trading before retreating.
Broader stock indicators also fell. The Standard & Poor’s 500 index fell 4.20, or 0.33 percent, to 1,283.04, and the Nasdaq composite index fell 19.40, or 0.85 percent, to 2,262.96.
Declining issues led advancers by roughly 9 to 7 on the New York Stock Exchange.
Bonds were lower, with the yield on the 10-year Treasury note at 4.56 percent, up from 4.54 percent late Friday.
