Stocks fell yesterday, snapping a two-day rally, after the Federal Reserve signaled it will keep raising interest rates and Dell reported disappointing sales.
The Fed's comments and its 12th consecutive increase in interest rates left investors concerned that economic growth will weaken while borrowing costs climb.
"They're not done and it's clear to me that these guys really are worried about an inflation bulge," said James Swanson, chief investment strategist at MFS Investment Management, which manages $157 billion in Boston.
The Standard & Poor's 500-stock index fell 4.25, or 0.4 percent, to 1202.76, paring some of the 2.4 percent gain of the previous two days. The Nasdaq composite index, which gets 45 percent of its value from technology shares, slid 6.25, or 0.3 percent, to 2114.05. The Dow Jones industrial average fell 33.30, or 0.3 percent, to 10,406.77.
A report showing manufacturing prices were at the highest since May 2004 sent stock indexes down even before the Fed's decision. Speculation that economic growth is slowing while inflation is accelerating weighed on stocks in October, with the S&P 500 losing 1.8 percent, its worst monthly performance since April.
Dell slumped $2.64, or 8.3 percent, to $29.24, for the third-steepest loss in the S&P 500. The computer maker reported third-quarter sales of $13.9 billion, which trailed the company's prediction of $14.1 billion to $14.5 billion. Sales also missed Dell's forecast in the second quarter.
Intel fell 85 cents, to $22.65. A measure of technology shares was the second-biggest contributor to the S&P 500's retreat among 10 industry groups.
IAC/InterActiveCorp, the television and Internet services company led by Barry Diller, rallied 52 cents, to $26.12, after reporting third-quarter earnings that topped forecasts.
Knight Ridder jumped $4.62, to $58. The newspaper publisher's largest investor, Private Capital Management, called for a sale of the company, citing management's inability to boost profit and Knight Ridder's stock price.
New York Stock Exchange composite index fell 7.94, to 7425.18.
American Stock Exchange index fell 4.03, to 1652.59.
Russell 2000 index of smaller-company stocks fell 3.59, to 643.02.
NYSE: 2.45 billion shares, down from 2.58 billion on Monday. Decliners outnumbered advancers
9 to 8.
Nasdaq: 1.94 billion shares, up from 1.9 billion. Decliners outnumbered advancers
11 to 8.
Crude oil for December delivery: $59.85, up 9 cents.
Gold for current delivery: $458.80 a troy ounce, down from $465.10 on Monday.