NEW YORK: Stocks fell Friday, sending benchmark indexes to their biggest declines since August, amid concern that Federal Reserve stimulus reductions and political debate over government spending pose a threat to economic growth this year.
Microsoft Corp. and General Electric Co. slipped at least 1.8 percent to pace declines among large companies. Caterpillar Inc. slumped 3.4 percent after its global retail machine sales dropped for a ninth consecutive month. BlackBerry Ltd. plunged 17 percent after announcing 4,500 job cuts. AK Steel Holding Corp. sank 8 percent, leading declines among steelmakers, after predicting a third-quarter loss.
The Standard & Poor’s 500 index fell 0.7 percent, the most since Aug. 27, to 1,709.91. The Dow Jones industrial average lost 185.46 points, or 1.2 percent, to 15,451.09 for the biggest retreat since Aug. 15. Both gauges slid for a second day after reaching a record Sept. 18.
“It’s probably a little confusing to the market what’s coming out of the Fed,” said John Kvantas, a San Antonio-based executive director who helps manage more than $16 billion at USAA Investments.
Futures and options contracts expired in a process known as quadruple witching. Announced index changes, such as the addition of Visa Inc., Goldman Sachs Group Inc. and Nike Inc. to the Dow and the S&P 500’s inclusion of Vertex Pharmaceuticals Inc. and Ametek Inc., took effect after the markets close. The operator of the S&P 500 also rebalanced the index, a quarterly move to adjust member weightings.
The S&P 500 climbed 1.3 percent this week, continuing a rebound from its worst month since May 2012, after the central bank unexpectedly refrained from reducing monetary stimulus. The Federal Open Market Committee said it wants more evidence of an economic recovery before paring its bond purchases. The stimulus helped boost the equity index 155 percent since March 2009.
The Fed is now expected to begin tapering asset purchases in December, with 24 of 41 economists surveyed Sept. 18-19 saying the central bank won’t take the first step in slowing its $85 billion in monthly bond buying until then.
The Fed’s decision to maintain the pace of stimulus prompted Barclays Plc to boost its estimate for the S&P 500 to 1,800, the highest 2013 projection among Wall Street equity strategists.
“ ‘Lower for longer’ monetary policy is more probable than we believed a week ago,” Barry C. Knapp, the firm’s head of U.S. equity strategy, wrote in a note Friday.
The new forecast implies a 5.3 percent gain from Friday’s close and tops the average strategist projection of 1,706, according to data compiled by Bloomberg. Knapp had previously said the S&P 500 would finish 2013 at 1,600.
Reports next week on data from second-quarter gross domestic product to July housing prices and August sales of new homes will help investors gauge the pace of growth.
Microsoft fell 2.5 percent to $32.79 and GE decreased 1.8 percent to $24.01.
Caterpillar declined 3.4 percent, the most in the Dow, to $84.75. The world’s largest maker of construction and mining equipment said total machine sales reported by dealers fell 10 percent in the three months through August from a year earlier as sales fell in every region except North America. The Asia-Pacific region had the largest losses with a 30 percent decline.
BlackBerry plunged 17 percent to $8.73, its steepest decline since June. The smartphone maker, which is evaluating a sale, said it will cut 4,500 jobs and record an inventory writedown of as much as $960 million after a new set of devices failed to catch on with consumers.
AK Steel slid 8 percent to $4.09. The steelmaker predicted its loss in the third quarter will be 22 cents to 27 cents a share, which includes a 9-cent loss related to a furnace outage in Middletown.
Darden Restaurants Inc. dropped 7.1 percent, the most in the S&P 500, to $45.78, after first-quarter profit trailed estimates amid declining sales at Olive Garden and Red Lobster.