U.S. stocks fall as economists predict Fed will reduce stimulus

U.S. stocks fell, sending the Standard & Poor’s 500 Index lower for the sixth time in eight days, after economists predicted the Federal Reserve will reduce stimulus in September as European data added to signs that the global economy is strengthening.

Macy’s Inc. fell 4.5% as the department-store chain cut its profit forecast after weaker-than-estimated sales. Homebuilders and utility stocks slumped amid rising bond yields. Apple Inc. rose 1.8%, extending a rally after billionaire investor Carl Icahn said yesterday he’s a shareholder.

The S&P 500 lost 0.5% to 1,685.39 at 4 p.m. in New York, the lowest level since July 29. The benchmark gauge has dropped 1.4% since a record high on Aug. 2. The Dow Jones Industrial Average declined 113.35 points, or 0.7%, to 15,337.66, the lowest since July 10. About 5.4 billion shares changed hands on U.S. exchanges, 14% below the three- month average.

“The market is scope-locked on Fed tapering in September,” Douglas Cote, chief market strategist at ING U.S. Investment Management in New York, said in a telephone interview. His firm oversees $190 billion. “Quantitative easing is creating some excess in the financial system. The last thing Bernanke wants when he finishes his term is to be responsible for the next bubble.”

The S&P 500 has fallen from a record high this month on growing speculation the Fed will pare stimulus, or quantitative easing, this year. Central bank stimulus helped propel the S&P 500 up more than 150% from its bear-market low in 2009.

Fed Stimulus

The Fed, led by Chairman Ben S. Bernanke, will probably reduce its $85 billion in monthly bond purchases at its meeting on Sept. 17-18, according to 65% of economists surveyed by Bloomberg from Aug. 9 to Aug. 13. In a survey last month, half of economists predicted a reduction at next month’s meeting.

A report today showed wholesale prices in the U.S. were little changed in July, reflecting the biggest drop in auto costs in four years. Fed policy makers continue to see inflation running below the central bank’s 2% goal even as the expansion picks up in the second half of the year.

Separate data showed the euro area’s economy emerged from a record-long recession in the second quarter, led by Germany and France. Gross domestic product expanded 0.3% after a 0.3% contraction in the first quarter, the European Union’s statistics office said.

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