U.S. stocks retreat amid concern Fed will taper bond buying

U.S. stocks fell, with the Dow Jones Industrial Average retreating from a record, amid concern that the Federal Reserve could begin to taper its debt-buying program as the economy continues to improve.

Eight out of 10 groups in the Standard & Poor’s 500 Index declined, as defensive sectors such as health-care, utility and consumer-staple stocks fell the most. Johnson & Johnson and Procter & Gamble Co. slumped more than 2.3%, pacing losses among the biggest U.S. companies. Lennar Corp. and PulteGroup Inc. fell at least 3.3% as investors sold shares of homebuilders.

The S&P 500 dropped 0.5% to 1,651.32 at 3:23 p.m. in New York. The Dow retreated 89.20 points, or 0.6%, to 15,320.19. Trading in S&P 500 companies was 4.7% lower than the 30-day average at this time of day.

“When yields do move higher, you’ll see some of those more defensive sectors take a hit,” Peter Jankovskis, who helps oversee $3.5 billion as co-chief investment officer of Lisle, Illinois-based Oakbrook Investments LLC, said by telephone. “The big question is how sustainable is the growth that we’re having now.”

U.S. equities retreated as much as 1.2% today after the yield on the country’s benchmark 10-year debt surged late yesterday to a 13-month high of 2.17% as a two-year sale drew the fewest bids since February 2011. Yields fell five basis points today to 2.12% as the government auctioned $35 billion of five-year notes at a lower-than-forecast yield.

Stimulus, Data

The S&P 500 dropped 1.1% last week as Fed Chairman Ben S. Bernanke said the central bank could reduce monetary stimulus if officials see signs of sustained improvement in growth. The index rose 0.6% yesterday and the Dow returned to a record after data showed consumer confidence climbed to the highest level since 2008 and house prices jumped the most in seven years, indicating growth in the world’s largest economy is picking up.

“We’ll have days when people are focusing on the positive economic story and days when people are focusing more on the issue that the Fed has in terms of slowing down their asset purchases and eventually moving interest rates,” Dan Curtin, the Boston-based global investment specialist at J.P. Morgan Private Bank, which oversees about $900 billion, said by telephone.

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