U.S. stocks on Thursday suffered their biggest one-day decline in a month, as investors take another look at the possibility of the Federal Reserve providing economic stimulus in the months ahead.
The Dow Jones industrial average closed at 13,057.46, down 115.30 points or 0.9 per cent. The broader S&P 500 closed at 1402.08, down 11.4 points or 0.8 per cent – its worst showing since July 24. Since touching a four-year high earlier this week, the index has retreated a total of 1.7 per cent.
In Canada, the S&P/TSX composite index closed at 12,062.51, down 56.48 points or 0.5 per cent..
The moves follow comments from Fed official James Bullard, who said in a television interview that the minutes from the last monetary policy meeting were “stale”, and that the probability of more stimulus from the Fed is probably lower than the market believes.
His comments follow Wednesday’s release of minutes from the Fed’s last monetary policy meeting, at the start of August. They suggested that the Fed is in fact closer to providing economic stimulus – and that quantitative easing was being considered – but only if the economy continued to disappoint. Since then, a number of economic indicators have improved, including better-than-expected job gains in July.
The economic news on Thursday was mixed. The U.S. Labor Department reported that initial jobless gains for the period ended last week rose to 372,000, up 4,000 and marking the second consecutive week of gains.
But new home sales rose 3.6 per cent in July, topping expectations amid a slight decline in unsold inventory – providing yet another reason to believe that the housing market is slowly recovering.
Boeing Co. fell 3.4 per cent after Australia’s Qantas Airlines cancelled orders for 35 Boeing aircraft.
Hewlett-Packard Co. fell 8.2 per cent after it updated its earnings projections for the full year, with earnings now expected to be at the low-end of an earlier estimate.
Among commodities, crude oil fell to $96.27 (U.S.) a barrel, down 99 cents. Gold rose to $1,672.80 an ounce. Among Canadian commodity producers, Barrick Gold Corp. rose 1.6 per cent and Suncor Energy Inc. fell 1.5 per cent.