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Wall Street takes a hit after economy reports

Wall Street takes a hit after economy reports

Wall Street stalled Thursday after a battery of reports indicated the economy is stronger than expected and raised concerns that the Federal Reserve might be more aggressive about interest rates next year.
There has been speculation in the market that Fed policymakers might be ready to cut interest rates because the economy appeared to be moderating on course. However, investors believed that better-than-expected reports that measured existing home sales, consumer sentiment, and manufacturing in the Midwest lessened the possibility of a cut.
Moreover, the trio of reports suggested to some that central bankers - who have left interest rates unchanged during their last four meetings - might even have to implement a rate hike on further signs the economy is growing too fast. This caused a sell-off in bonds, and stifled a stock market surge that pushed the Dow Jones industrials past the 12,500 mark for the first time on Wednesday.
Even with the prospect that a rate cut isn't in the offing, investors remain positive, analysts said. Still, volume was thin, typical for the week between Christmas and New Year, which means price swings can be exaggerated. The market's real response could come next week when most of Wall Street gets back from vacation.
"You'd expect some kind of correction after these reports, and the fact we're not getting one shows Wall Street is pretty bullish," said Ryan Detrick, equity analyst at Schaeffer's Investment Research. "With the market going up, and not too many sellers out there, we could stay at these levels until we get back next week."
The Dow Jones industrial average fell 9.05, or 0.07 percent, to 12,501.52, after reaching a new trading high of 12,529.88. That's slightly above Wednesday's record close of 12,510.57.
Broader stock indicators slipped. The Standard & Poor's 500 index fell 2.11, or 0.15 percent, to 1,424.73, while the Nasdaq composite index fell 5.65, or 0.23 percent, to 2,425.57.
Despite the dip during the session, major indexes are heading toward double-digit gains for the year. The Dow is now up 16.7 percent this year, while the Nasdaq has risen about 10 percent.