Wall Street falls on data, Fed hopes dim
NEW YORK (Reuters) - Stocks fell on Thursday as expectations for swift stimulus action from the Federal Reserve dimmed and Chinese and euro zone data pointed to stalling global growth.
A near 7 percent slump in Hewlett-Packard shares weighed on the technology sector but the S&P 500 stayed above 1,400, holding on to most of its recent gains.
Minutes from the latest Federal Reserve meeting indicated the central bank might be ready for another round of stimulus, giving equities support on Wednesday.
However, Federal Open Market Committee non-voting member and St. Louis Fed President James Bullard said on CNBC that U.S. data has been somewhat better since the latest Fed meeting and the minutes were "a bit stale.
"There could be a tiny bit of steam coming out of the QE3 balloon," said Jack de Gan, chief investment officer at Harbor Advisory Corp in Portsmouth, New Hampshire.
World business surveys painted a picture of economic malaise stretching from Beijing to Berlin, adding to concerns that the world economy was slowing down. The HSBC Flash China manufacturing PMI fell to 47.8 in August, its lowest level since November.
"There's no important news out of Europe on their debt crisis, which leaves China as the big issue and the latest reading is weak," said De Gan.
"When you have a rally like we've had you need incremental good news to keep it going and we haven't had that."
He added, however, that following the more than 12 percent rise from the June lows to this week's four-year high on the S&P 500, Thursday's decline was not very significant.
The Dow Jones industrial average fell 88.56 points, or 0.67 percent, to 13,084.20. The S&P 500 Index dropped 8.43 points, or 0.60 percent, to 1,405.06. The Nasdaq Composite lost 22.31 points, or 0.73 percent, to 3,051.36.
The number of Americans filing new claims for jobless benefits unexpectedly rose last week while U.S. manufacturing improved only slightly in August, worrisome signs for an economy struggling to create enough jobs. Sales of new single family homes rose 3.6 percent in July to 372,000 units - matching April's two-year high.
The data seem to indicate the economy is not slowing at a fast-enough pace to warrant further action from the Fed.
A host of brokerages cut their price targets on Hewlett-Packard's stock, after the No. 1 PC maker posted an $8.9 billion loss and cut its earnings outlook for the year, echoing concerns raised by rival Dell about faltering demand for PCs.
HP shares fell 6.7 percent to $17.91 and Dell extended recent losses and was down 2.9 percent at $11.34.
Shares of U.S. steel producers fell after a Wall Street analyst downgraded the sector on the belief that prices of the metal will decline. U.S. Steel fell 3.8 percent to $21.90 and the S&P materials sector dropped 1.1 percent.
Big Lots shares slid 20 percent to $31.07 after the retailer reported a lower-than-expected quarterly profit and cut its full-year adjusted earnings forecast.
(Additional reporting by Angela Moon, editing by Dave Zimmerman)