U.S. stocks fall as ecomonists predict Fed will curtail stimulus

Fed Debate

The benchmark equity gauge has alternated between gains and losses for the past seven sessions as Fed policy makers continue to debate when to begin reducing monetary stimulus. The S&P 500 added 0.6% yesterday, erasing early losses after Fed Bank of Atlanta President Dennis Lockhart said the central bank is committed to its bond purchases even as divergent views on when to start scaling them back create a “mixed message” to investors.

The stimulus, and better-than-expected corporate earnings, have propelled the bull market in U.S. equities into a fifth year and driven the S&P 500 up 141% from a 12-year low in 2009.

‘Lingering Concern’

“There’s a lingering concern that without the Fed support the economy might sputter and come to a halt,” John Carey, a fund manager at Boston-based Pioneer Investment Management Inc., said by telephone. His firm oversees about $208 billion. “I think there’s enough momentum in the economy to keep going without so much intervention from the Fed at this point.”

Investors will get more insight into the economy’s strength this week as two reports are forecast to show growth in payrolls in May. U.S. companies added 165,000 employees last month, ADP Research Institute will say tomorrow, according to a Bloomberg News survey of economists, and government data on June 7 is predicted to show similar growth.

The U.S. added 165,000 jobs in April, more than forecast, and the unemployment rate unexpectedly fell to 7.5%.

The recovery of the U.S. economy needs to show much more progress, Fed Governor Sarah Bloom Raskin said today in a panel discussion on employment in Washington today.

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