Stocks extended declines today after Fed Bank of Atlanta President Dennis Lockhart said the U.S. economy is on “solid footing” and he would support continued cuts to stimulus.
Three rounds of monetary stimulus from the Fed have helped push the S&P 500 higher by 169% from a 12-year low in 2009. The Fed, which next meets Jan. 28-29, last month announced a reduction in its monthly bond-buying program, citing a recovery in the labor market.
The S&P 500 increased on Jan. 10 after a report from the Labor Department showed employment rose in December at the slowest pace in almost three years. The data ended months of improving job growth that had signaled the world’s largest economy was picking up.
“It sounds as if the Fed is staying on its course of tapering,” John Carey, a fund manager at Boston-based Pioneer Investment Management Inc., said in a telephone interview. His firm manages about $220 billion worldwide. “Whatever mixed signals could have come from the jobs numbers, they’re looking at the overall picture.”
The Chicago Board Options Exchange Volatility Index, which measures expected swings on the S&P 500 using options prices, rose 10% to 13.35. The gauge fell 12% last week to its lowest level since Aug. 5.
All 10 main industries in the S&P 500 declined, with financial, energy and consumer-discretionary companies dropping more than 1.5%.
Lululemon slumped 16% to $49.77, the lowest level in two years. The yogawear retailer cut its revenue and earnings forecast for its fourth quarter ending Feb. 2. Lululemon joins retailers from L Brands Inc. to Family Dollar Stores Inc. that have cut forecasts this month in the wake of a margin-eating price war this holiday season.
Vancouver-based Lululemon has been trying to win back customers after being forced to recall pants last year for being too sheer and has struggled to overcome supply-chain delays as it expands overseas and fends off growing competition.