U.S. Stocks Lower; Dow Drops Around 100 Points

By Dow Jones Business News, 
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By Alexandra Scaggs

U.S. stocks fell on Wednesday, as buyers took a breather after a string of records for the Dow Jones Industrial Average.

The Dow shed 98 points, or 0.6%, to 16848, putting it on track to break a four-day streak of all-time closing highs. Helping weigh down the Dow was a decline in shares of Boeing, which fell 2.3% amid broad weakness in the airline sector and after a Wall Street analyst downgraded its stock.

The S&P 500 index fell six points, or 0.3%, to 1944. Technology stocks held up relatively well throughout the session, with the Nasdaq Composite Index recently down five points, or 0.1%, to 4333.

Traders and strategists noted that quiet trading has continued in recent sessions, which have brought small moves in broad indexes. Stock-market volatility is at its lowest level since the financial crisis.

"Stocks are just kind of drifting right now," said Christian Ledoux, director of equity research at South Texas Money Management, which manages $2.3 billion. "We're not very active."

Instead of making broad bets on sectors or benchmarks, his fund has been adding to individual holdings, he said. He expects trading to get bumpier throughout the year, and his fund recently bought shares of Waste Management Inc., which he thinks will hold up well if broader markets decline.

The market's so-called fear gauge edged higher, but remained well below long-term averages. The Chicago Board Options Exchange's Volatility Index rose 3.8% to 11.41. Its long-term average is around 20.

"The low level of volatility...is what we see as one of the big risks in the market," said Peter Molloy, director with Edison Investment Research. "That's going to change. There is much more risk in the economy than the market is pricing in, in terms of a potential interest rate shock."

Traders said the World Bank's cutting of its global economic growth forecast to 2.8% for the year from its 3.2% forecast in January helped set a negative tone for stocks. The World Bank also highlighted that China's faltering housing market was a growing concern.

No major economic data were due Wednesday. Investors will be looking ahead to data on jobless claims and retail sales on Thursday, and wholesale inflation and consumer sentiment on Friday.

The yield on the 10-year Treasury note edged up to 2.642% from a four-week high of 2.637% late Tuesday.

Crude-oil futures tacked on less than 0.1% to $104.36 a barrel, and gold futures gained less than 0.1% to $1,260.50 an ounce. The dollar edged up against the euro and lost some ground against the yen.

European markets fell, with the Stoxx Europe 600 down 0.6%, marking the first loss in six sessions, after closing at a 6 1/2-year high on Tuesday. Data showed that U.K. unemployment fell more than expected in the three months to April, fueling expectations that the Bank of England might raise interest rates sooner than expected. Sterling rallied on the data.

Asian markets were mostly higher, with Japan's Nikkei Stock Average rising 0.5% and China's Shanghai Composite tacking on 0.1%.

In corporate news, Synaptics Inc. rallied 27% after the company raised its revenue outlook for the current quarter. Synaptics also announced the acquisition of Renesas SP Drivers, a maker of display products for mobile gadgets, for about $475 million.

Morgan Stanley declined 1. 1% after the bank said late Tuesday it is cutting jobs in its currency and interest rate trading businesses, citing a slowdown in those markets. The cuts will affect fewer than 100 people, The Wall Street Journal reported.

Orexigen Therapeutics tumbled 17% after the company said the U.S. Food and Drug Administration has extended the review of its investigational weight-loss drug.

Write to Alexandra Scaggs at alexandra.scaggs@wsj.com


  (END) Dow Jones Newswires
  06-11-141406ET
  Copyright (c) 2014 Dow Jones & Company, Inc.


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