Stocks fall in early trading on Wall Street

By Steve Rothwell

Associated Press

Published: Wednesday, May 29 2013 9:20 a.m. MDT

Specialist Fabian Caceres works at his post on the floor of the New York Stock Exchange. In government bond trading, the yield on the 10-year Treasury note, which moves inversely to its price, fell to 2.16 percent from 2.17 percent. The yield surged Tuesday to its highest level in more than a year as investors moved out of bonds on concern that the Fed plans to start easing back on its bond purchases.

Richard Drew, Associated Press

Enlarge photo»

NEW YORK — Stocks fell in early trading on Wall Street as investors assessed whether a rally that has pushed stocks to record levels this year has run its course.

The Dow Jones industrial average climbed to a record on Tuesday and is still on track to end higher for a sixth straight month. The Standard & Poor's 500 index is on track to gain for a seventh consecutive month, its longest winning streak since 2009.

Markets jumped on Tuesday after reports showed that consumer confidence was improving and home prices were rising at their fastest rate in seven years.

Though investors were cheered by the strong reports they are also concerned that the Fed will start to ease back on its stimulus program as the economy improves.

"Investors are no better than hyperactive first graders playing musical chairs — they're always trying to out-anticipate the other," said Sam Stovall, chief U.S. equity strategist for S&P Capital IQ. "They're now trying to figure out: 'Well, should I now take some profits and sit on the sidelines and then get back in?' "

The Dow fell 161 points, or 1 percent, to 15,247 as of 10:50 a.m. Eastern Daylight Time. The S&P 500 index fell 17 points, or 1.1 percent, to 1,642. The Nasdaq composite dropped 32 points, or 1 percent, to 3,456.

The Fed has been buying $85 billion of bonds a month in an effort to keep interest rates low and boost the economy. That stimulus has also been a major factor supporting the rally in stocks.

In commodities trading, the price of crude oil fell 39 cents, or 0.4 percent, to $94.63. Gold rose $8, or 0.6 percent, to $1,386.80 an ounce. The dollar fell against the euro and the Japanese yen.

In government bond trading, the yield on the 10-year Treasury note, which moves inversely to its price, fell to 2.16 percent from 2.17 percent. The yield surged Tuesday to its highest level in more than a year as investors moved out of bonds on concern that the Fed plans to start easing back on its bond purchases.

There were no major economic reports scheduled on Wednesday.

Among stocks making big moves:

— Smithfield Foods surged $6.51, or 25 percent, to $32.49 after the company agreed to be acquired by meat processor Shuanghui International Holdings for approximately $4.72 billion.

— Stewart Enterprises rose $3.33, or 34 percent, to $13.08 after the funeral company agreed to be acquired by Service Corp International for $1.1 billion in cash.

— Sallie Mae jumped $1.46, or 6 percent, to $24.41, the biggest gain in the S&P 500 index. The company, which is formally named SLM Corp., announced a plan to split into two separate companies, one that manages student loans and a consumer banking business.

— Michael Kors Holdings rose $1.19, or 2 percent, to $63.23 after the fashion company reported that its profit more than doubled on surging sales in the fourth quarter, capping another strong year for the upscale handbag maker.

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