By Victor Reklaitis and Sara Sjolin, MarketWatch
NEW YORK (MarketWatch) -- U.S. stocks stepped back Thursday in
light trading, with the S&P 500 retreating from 2,000 and
halting its three-day winning streak. Many market watchers blamed
the decline on fresh Russian aggression toward Ukraine.
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 3.38 points, or 0.2%, to close at
1,996.74. The index had been down 0.5% intraday, but lifted up from
its session lows.
The Dow Jones Industrial Average (DJI) shed 42.44 points, or
0.3%, to end at 17,079.57 after being down almost 104 points, while
the Nasdaq Composite(RIXF) lost 11.93 points, or 0.3%, to finish at
4,557.69.
Total composite volume was at its lowest level of the year for a
full trading day, and market action is likely to be light again
Friday ahead of the Labor Day weekend.
All three benchmarks remain on track for weekly gains, as well
as monthly advances of more than 3%. 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 dropped
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 for
stocks 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.
The latest flare up in the Russia-Ukraine conflict "could blow
over quickly as both sides pull back from the brink," said analysts
at Capital Economics in emailed comments. "But for now it may be
time for the markets to batten down the hatches again, especially
ahead of the long weekend in the US (Monday is Labor Day)."
Movers and shakers: Abercrombie & Fitch Co. (ANF) and
Williams-Sonoma Inc. (WSM) finished down 4.8% and 12%,
respectively, after their quarterly earnings reports, while Signet
Jewelers Ltd. (SIG) rose 7.7% in the wake of its results.
Visa Inc. (V) fared worst among Dow components, falling 1.2%
after Raymond James analysts downgraded the credit-card giant to
market perform, citing a lack of positive catalysts. TripAdvisor
Inc. (TRIP) was the S&P 500's biggest decliner, closing down
2.4%.
(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.)
The PowerShares QQQ Trust (QQQ) closed down 0.1%, snapping an
11-session winning streak. The big ETF that tracks the Nasdaq 100
(NDX) last achieved an 11-day winning streak in 2010. (Read more:
One streak you didn't notice suggest there's room to run
http://blogs.marketwatch.com/need-to-know/2014/08/28/one-streak-you-didnt-notice-suggests-theres-room-to-run/.)
Other markets: European stocks closed lower as the first
country-specific reports on August consumer prices fueled deflation
fears and renewed Russia-Ukraine tensions weighed. Asian markets
finished mostly in the red.
Oil prices gained, while gold also moved higher. The dollar
advanced against most of its rivals.
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