By Victor Reklaitis and Sara Sjolin, MarketWatch
NEW YORK (MarketWatch) -- U.S. stocks stepped back Thursday
after worries about Russian aggression toward Ukraine ramped up
again, with the S&P 500 retreating from 2,000 and eyeing an end
to its three-day winning streak.
Kiev said Russian forces had entered Ukraine and seized the
coastal town of Novoazovsk, and a NATO official said Russia's
actions in Ukraine are "more overt now." A
stronger-than-anticipated reading on U.S. economic growth failed to
push equities higher.
The S&P 500 (SPX) fell 5 points, or 0.2%, to 1,996 after
being down nearly 10 points, while the Dow Jones Industrial
Average(DJI) shed 58 points, or 0.3%, to 17,064 after being down
104 points. The Nasdaq Composite(RIXF) lost 10 points, or 0.2%, to
4,559.
All three benchmarks remain on track for modest weekly gains. On
Wednesday, the S&P 500 and Dow both closed higher for a third
straight session, with the S&P holding above 2,000 and nabbing
its 31st record close this year.
GDP beats forecasts: The second estimate for second-quarter U.S.
gross domestic product indicated expansion of 4.2%. Economists
polled by MarketWatch had predicted 3.9% growth in GDP, down from
an initial read of 4%.
Weekly jobless claims came in at 298,000, a slightly more
encouraging result than expected, and an index that measures how
many U.S. homes are ready to be sold jumped to its highest level in
11 months.
What strategists are saying: The U.S. stock market is down
partly due to Russia-Ukraine concerns, but a bigger driver could be
the upbeat GDP report putting further pressure on the Federal
Reserve to hike interest rates, according to Doug Coté, chief
market strategist at Voya Investment Management.
He said it's "dangerous" to have a zero-interest rate policy
when growth is at 4.2%. "We need to get off a zero-rate policy as
soon as possible," Coté told MarketWatch.
Expectations of higher rates could increase volatility in the
near term, but the Voya strategist still recommends buying equities
and other risk assets, "because ultimately what's raising the
prospect of rising rates is strong economic growth," he said.
Movers and shakers: Abercrombie & Fitch Co. (ANF) and
Williams-Sonoma Inc. (WSM) dropped 6% and 11%, respectively, after
their quarterly earnings reports, while Signet Jewelers Ltd. (SIG)
rose 6% in the wake of its results.
Visa Inc. (V) fared worst among Dow components, falling 1% after
Raymond James analysts downgraded the credit-card giant to market
perform, citing a lack of positive catalysts. TripAdvisor Inc.
(TRIP) and Garmin Ltd. (GRMN) were among the S&P 500's bigger
decliners, as each stock slid more than 1%.
(Read more about Thursday's jumpiest stocks in the Movers &
Shakers column
http://www.marketwatch.com/story/workday-williams-sonoma-guess-are-stocks-to-watch-thursday-2014-08-28.)
Other markets: European stocks posted losses as the first
country-specific reports on August consumer prices fueled deflation
fears and renewed tensions in Ukraine weighed. Asian markets closed
mostly in the red.
Oil prices gained, while gold also moved higher. The dollar
advanced against most of its rivals.
Subscribe to WSJ: http://online.wsj.com?mod=djnwires