Dow, S&P slip from recent records
NEW YORK — Stocks dropped on Wednesday, with the Dow and S&P 500 pulling back from recent record highs, following the World Bank’s reduction of its global growth forecast.
Losses were broad with every sector except energy down for the day. The S&P 500 was on track for its biggest daily percentage loss since May 20.
Recent sessions have been marked by low volume and low volatility, leaving indexes to trade in a narrow range while still hitting records. The Dow ended at a fourth straight record high on Tuesday, while the S&P 500 finished lower after four days of record closing highs.
“It doesn’t surprise me to see the markets cool off. It feels like we’re in the middle of the summer where we have a complacent market with a lot of people on vacation,” said Fred Dickson, chief market strategist at D.A. Davidson & Co in Lake Oswego, Oregon.
But he said that could set the market up for bigger moves, especially with stocks trading near record highs.
A lower World Bank growth forecast gave investors a reason to sell some stocks. Late Tuesday, the World Bank cut its global economic growth forecast for 2014 to 2.8 percent from 3.2 percent due to the impact of the Ukraine crisis and a harsh U.S. winter.
Investors viewed the surprising primary election defeat of Eric Cantor, the No. 2 Republican in the House of Representatives, by an upstart candidate from the Tea Party movement as a signal to be cautious.
The biggest drag on the S&P 500 was Bank of America Corp , which has reached an impasse in negotiating a multibillion-dollar settlement with the U.S. Department of Justice relating to the bank’s mortgage investments, according to The New York Times. The bank’s stock dropped 2 percent to $15.59.
The Dow Jones industrial average fell 108.21 points or 0.64 percent, to 16,837.71. The S&P 500 slipped 7.81 points or 0.40 percent, to 1,942.98. The Nasdaq Composite dropped 12.24 points or 0.28 percent, to 4,325.75.
The CBOE Volatility Index rose 6.6 percent to 11.71 on Wednesday but remained well below its historical average of 20. In a sign of the market’s low volatility, the 14-day Average True Range on the S&P 500 hit 10.09, the lowest since February 2013.
Orexigen Therapeutics Inc shares sank 16.3 percent to $5.70 after the U.S. Food and Drug Administration delayed a decision on the marketing application for its obesity drug by three months.