Wall Street dips on taper uncertainty, Facebook rallies

US stocks dipped on Thursday as retail sales rose solidly in November, adding to signs the economy is strong enough for the Federal Reserve to begin reducing the pace of monetary stimulus.

Profit-taking also played a part in the market's decline, while a view that Wall Street has gone too long without a correction was seen keeping traders poised to sell.

"Year-end activity is clouding reactions to some economic news," said Drew Wilson, an analyst at Fenimore Asset Management in Cobleskill, New York.

He said the market is "taper-schizophrenic", as it tries to second-guess the Fed's reaction to recent positive economic data.

 

"I'm not sure the market knows how to react to good and bad news."

Facebook , however, was poised to close at its highest since late October a day after being picked to join the S&P 500 index. The social network's 5.2% gain to $51.98 helped buoy the Nasdaq composite index to a small gain.

The Dow Jones industrial average fell 59.69 points, or 0.38%, to 15,783.84, the S&P 500 lost 1 point, or 0.06%, to 1,781.22 while the Nasdaq Composite added 7.142 points or 0.18%, to 4,010.955.

Other markets also reacted to the perception of a shorter timeline for the Fed's tapering of its stimulative bond buying. The US dollar rose against a basket of major currencies and spot gold slid 2%.

Many market participants have expected the Fed to announce a cut in its $85 billion a month in asset purchases in March, but that timeline may have shortened after Friday's better-than-expected November payrolls report and Tuesday's initial agreement in Washington on a bipartisan budget.

The Fed's policy-setting committee is due to meet for the last time this year on Tuesday and Wednesday.

Data showing the biggest jump in a year in initial claims for unemployment benefits was mostly ignored as figures skewed by adjustments for the season and other factors.

Lululemon Athletica Inc shares tumbled 11.1% to $60.76 after the sports apparel company said fewer customers are visiting its stores and supply-chain issues are hitting sales in the crucial fourth quarter.

Investors also dealt with a flurry of initial public offerings, including Hilton Worldwide Holdings Inc . The stock rose 8.9% to $21.77 from its $20 pricing on the New York Stock Exchange.

Food services provider Aramark Holdings Corp staged a more impressive debut, up 14.9% at $22.98 after pricing at $20 per share.

Shares of J C Penney rose 0.5% to $8.52. Chief Executive Officer Mike Ullman told Reuters the department store chain is eliminating or trimming some high-profile brands introduced by former CEO Ron Johnson. Penney intends to use the floor space for its more profitable private-label brands.