U.S. stocks dropped yesterday, trimming the Standard & Poor's 500-stock index's biggest monthly rally this year, on concern the Federal Reserve will keep raising interest rates.
Financial companies such as Citigroup paced the decline after a government report showing the economy expanded more than 3 percent for a ninth straight quarter. Apple Computer led technology shares lower as Hewlett-Packard ended an agreement to sell Apple's iPod digital music players.
"The market has been moving up steadily all month, and if we had a sell-off of a couple of percent, I wouldn't be too shocked," said Brian Barish, president of Cambiar Investors, which manages $4 billion in Denver. "I just don't see the market hitting 1300 without a clear sign that the Fed is going to stop raising rates."
The S&P 500 ended down 9.54, or 0.8 percent, to 1234.18. The Nasdaq composite index slipped 13.61, or 0.6 percent, to 2184.83. Both benchmarks retreated from their highest levels since June 2001. The Dow Jones industrial average lost 64.64, or 0.6 percent, to 10,640.91.
Today's sell-off left the S&P 500 little changed for the week. The Nasdaq added 0.2 percent, while the Dow slipped 0.1 percent.
Better-than-expected earnings and economic reports pushed the S&P 500 up 3.6 percent this month and wiped out its year-to-date loss. It jumped 3.9 percent in November 2004. The Dow rallied 3.6 percent in July while the Nasdaq increased 6.2 percent.
Financial shares were the biggest drag on the S&P 500 among 10 industry groups, falling 0.9 percent, amid concern that higher interest rates will crimp demand for loans and home mortgages.
Citigroup fell 36 cents, to $43.50.
Wells Fargo fell 60 cents, to $61.34.
Whole Foods Market rose $14.19, to $136.51, on a jump in profit.
Wendy's International rose $6.43, to $51.70, for the steepest rise in the S&P 500 after announcing plans to improve performance, including closing or selling some stores. Wendy's also said it would buy back an additional $1 billion in shares.
Pulte Homes, the nation's second-largest home builder by market value, fell $2.23, to $93.62.
Electronic Data Systems rose 82 cents, to $20.57, after unexpectedly reporting a profit.
New York Stock Exchange composite index fell 40.12, to 7476.66.
American Stock Exchange index rose 19.22, to 1604.63.
Russell 2000 index of smaller-company stocks fell 3.29, to 679.75.
NYSE: 1.8 billion shares, down from 2.02 billion on Thursday. Decliners outnumbered advancers 3 to 2.
Nasdaq: 1.59 billion shares, down from 1.71 billion. Decliners outnumbered advancers 7 to 6.
Light, sweet crude oil for September delivery: $60.57, up 63 cents.
Gold for current delivery: $429.90 a troy ounce, up from $427.40 on Thursday.