Stocks fall after Fed signals June rate hike possible

Stocks are dropping in midday trading today as industrial companies drag major indexes lower. Health care companies also dropped. Investors braced themselves for the likelihood of an interest rate increase in June at the Federal Reserve's next policy meeting.
The Dow Jones industrial average fell 126 points, or 0.7 per cent, to 17,401 at 12:16 pm Eastern time. The Standard & Poor's 500 lost 14 points, or 0.7 per cent, to 2,034. The Nasdaq composite fell 43 points, or 0.9 per cent, to 4,696.
The minutes of the Fed's last meeting, released yesterday, weighed on markets for a second day. The news that the Fed could be ready to raise interest rates in June came as a surprise to many investors. Policymakers indicated an increase would only be made if the economy and labor market continued to strengthen.

"This is all about the Fed," said Bill Strazzullo, chief market strategist at Bell Curve Trading. "Putting June on the table was something few expected."
Industrial and health care companies each fell 1.3 per cent, more than the rest of the market. Those stocks have outperformed the market this year because of their reliable dividends, but higher rates on bonds would diminish the appeal of those stocks to investors seeking income.
"Many of these stocks already had significant moves up and were due for a correction," said Chief Investment Officer Henry Smith of Haverford Trust, referring to high-dividend stocks. "They have decent yields, but high valuations."

Wal-Mart Stores jumped 9 per cent after reporting surprisingly strong sales and releasing an optimistic outlook. The stock of the world's largest retailer rose USD 5.77 to USD 68.91.

Urban Outfitters jumped USD 2.18, or 12 per cent, to USD 27.77 after reporting first-quarter sales that exceeded analyst forecasts. The solid results from Urban and Wal-Mart contrasts with dour reports from many other retailers in recent weeks.
Monsanto rose USD 4.42, or 4.5 per cent, to USD 101.55 after German drug and chemicals company Bayer confirmed it has entered talks with the U.S.-based seed company.
Germany's DAX fell 1.5 per cent while the CAC-40 in France fell 0.9 per cent. Britain's FTSE 100 index was down 1.8 per cent.

The Nikkei 225 index in Tokyo ended flat, while South Korea's Kospi lost 0.5 per cent. Hong Kong's Hang Seng shed 0.7 per cent. Australia's S&P/ASX fell 0.6 per cent.Benchmarks in Taiwan, New Zealand and Southeast Asia also lost ground.
Benchmark US crude oil fell 31 cents to USD 47.88 a barrel in New York. Brent crude, used to price international oils, dropped 30 cents to USD 48.63 a barrel in London.