By Victor Reklaitis, MarketWatch
NEW YORK (MarketWatch) -- U.S. stocks dropped on Thursday, with
strategists attributing the move to investors taking profits after
a strong run for equities that has the S&P 500 and the Dow
industrials right below record highs.
"The backdrop still remains fairly good, but it's just people
taking some chips off the table," said Scott Wallace, founder and
chief investment officer at Ranger Asset Management and previously
a portfolio manager at AllianceBernstein.
The S&P 500 index (SPX) was down 10 points, or 0.6%, to
1,760, after rising initially and eyeing a new record close. It's
up more than 23% for the year.
The Dow Jones Industrial Average (DJI) lost 48 points, or 0.3%,
to 15,699.
The Nasdaq Composite(RIXF) fell 49 points, or 1.2%, to
3,883.
Stocks erased opening gains that came early Thursday following a
surprise interest-rate cut in Europe and a better-than-expected
estimate on U.S. economic growth. The S&P 500 and Dow both had
been on pace for fresh record closes before turning lower.
Investors also watched shares in Twitter Inc.(TWTR) soar during
their first day of trading on the New York Stock Exchange.
Chris Bertelsen, chief investment officer at wealth manager
Global Financial Private Capital, downplayed the market's choppy
action on Thursday.
"It's probably a bit of back and fill for a market that's had a
good run," Bertelsen said. He also noted that Qualcomm Inc.'s(QCOM)
4% drop after its quarterly report weighed on the Nasdaq.
Ranger's Wallace noted that winning stocks such as Facebook Inc.
(FB) and energy play EOG Resources Inc.(EOG) have seen selling in
the last week or two even after strong quarterly earnings reports.
He suggested many investors want to lock in gains because they
remember the financial crisis and remain worried about their
profits evaporating.
Investors are thinking "let me protect my gains, harvest some
gains and go home," Wallace said. He expects stocks to finish 2013
at around their current levels or slightly higher.
Other strategists attributed the selling to the
better-than-expected report on U.S. economic growth, arguing that
may help the Federal Reserve decide to taper its bond-buying
program that's boosted equities. The U.S. Commerce Department said
third-quarter GDP increased 2.8%, beating forecasts for a rise of
2.3%. Weekly jobless claims came in at 336,000, roughly in line
with expectations of 335,000.
Before the U.S. stock market opened, the European Central Bank
cut its benchmark interest rate by quarter of a percentage point to
a record low 0.25%. U.S. stock futures jumped on that move, then
largely maintained their gains after the reports on U.S. economic
growth and jobless claims.
The euro (EURUSD) dropped sharply after the ECB rate cut.
European stocks rose on the cut, but now have followed U.S. stocks
lower.
Asian stocks fell, with a drop for Toyota Motor Corp. (TM)
weighing on Japan's index after the auto maker posted disappointing
results.
Oil prices and gold prices declined, while the dollar rose.
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