U.S. stocks fall on stimulus bets after jobs, factory reports

U.S. stocks fell, sending the Standard & Poor’s 500 Index to a one-month low, as jobs and factory data missed estimates and investors speculated whether the Federal Reserve will taper bond purchases.

All 10 S&P 500 industry groups retreated as raw-materials and financial companies fell the most. An index of homebuilders slumped 1% as mortgage applications dropped for a fourth straight week. Apple Inc. slipped 0.8% after a U.S. trade agency said it infringed a patent owned by Samsung Electronics Co. Microsoft Corp. and Joy Global Inc. fell at least 0.8% following analyst downgrades. Walgreen Co. climbed 1.6% as sales exceeded analysts’ estimates.

The S&P 500 lost 1.2% to 1,612.07 at 2:59 p.m. in New York, the lowest since May 3. The Dow Jones Industrial Average declined 186.84 points, or 1.2%, to 14,990.70. Trading in S&P 500 stocks was 7.6% higher than the 30-day average during this time of day.

Today’s economic data “may throw some cold water on this economic growth story continuing,” Bill Schultz, who oversees about $1.1 billion as chief investment officer at McQueen Ball & Associates in Bethlehem, Pennsylvania, said by phone. “So you got this contrast in what the Fed should do. All those cross- currents throw on some caution on the whole market. Investors are taking a pause and a more look-and-see approach than they have in the past, where equities are the only place to be.”

Investors considered mixed data today, as a report from ADP Research Institute showed companies in the U.S. hired fewer workers than projected in May amid federal budget cuts and higher taxes. Separate data from the Commerce Department showed U.S. factory orders in April fell short of estimates. A gauge of service industries, which covers almost 90% of the economy, rose more than forecast.

Beige Book

The economy expanded at a “modest to moderate” pace in 11 of 12 Federal Reserve districts, with broad-based gains ranging from business services to construction and manufacturing, the central bank said today in its Beige Book business survey. The report is based on data collected by its regional banks on or before May 24.

A Labor Department report on June 7 may show employers added 167,000 people to payrolls last month after a gain of 165,000 in April, according to the median of 85 economists’ estimates in a Bloomberg survey.

The S&P 500 has dropped 3.4% since closing at a record high on May 21 as Fed policy makers continue to debate whether the economy is strong enough to begin reducing monetary stimulus.

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