Wall Street Ends Lower on Central Bank Fears

Stocks slumped on Tuesday after the Bank of Japan declined to take additional stimulus measures, a move that increased investors’ worries about the eventual decline in central bank support that has bolstered an equities rally.

At the end of Wall Street trading, the Standard & Poor’s 500-stock index was down 1 percent in afternoon trading, the Dow Jones industrial average was off 0.8 percent and the Nasdaq composite was 1 percent lower.

The Bank of Japan kept monetary policy steady at the end of its two-day meeting, holding off on taking fresh steps to calm bond market volatility. Unhappy traders sent the Nikkei down 1.5 percent.

The lack of additional action rattled investors, underscoring worries about what would happen when the stimulus programs eventually go away. At the same time, nervousness remains over when the Federal Reserve may slow its measures, which have been a significant driver of this year’s stock market rally.

“This market has been fed by extremely supportive government policies around the world,” said Richard Meckler, president of the investment firm LibertyView Capital Management in Jersey City. “You’re getting to that period where investors have to recognize that these policies are beginning to wrap up.”

In Europe, the broad FTSE Eurofirst 300 index of top shares, which has shed 5 percent in the previous 12 trading sessions, ended Tuesday’s session 1.2 percent lower.

But United States Treasury prices turned higher on Tuesday, as the benchmark 10-year Treasury note, erasing a modest loss, was up 6/32 to yield 2.19 percent. The 30-year Treasury extended a gain to 24/32, allowing its yield to ease to 3.33 percent.

Shares of Lululemon Athletica slumped more than 17 percent after the company’s chief executive said she would step down.

SoftBank said it would raise its offer for Sprint Nextel to $21.6 billion from $20.1 billion. Sprint was up 2.4 percent.

The S.&P. 500 is up more than 15 percent since the start of the year, but markets have been bumpier since comments from the Fed chairman, Ben S. Bernanke, last month sparked uncertainty over the central bank’s timeline for slowing its $85 billion a month bond purchase program.

While the Bank of Japan left the door open to taking fresh steps to calm markets if borrowing costs spiked again, it did not appear to assuage investors. “The B.O.J. took some big steps and had some big changes but now that they’ve done that, the market is looking for even more,” Mr. Meckler said.

Seasonality was also playing a part in Tuesday’s weakness as equities tend to have less direction in the summer months, he said.

Shares in the Dole Food Company rose 22 percent after Dole received an unsolicited buyout offer from its chief executive.

The Catamaran Corporation climbed 11 percent after it signed a 10-year agreement with the Cigna Corporation.

Boeing raised its 20-year forecast for demand, saying airlines will need 35,280 new airplanes worth $4.8 trillion as the world’s fleet doubles. Boeing shares fell 0.5 percent.

The yen extended its rally after the Bank of Japan’s lack of action, and the dollar traded as low as 95.68 yen for a 3 percent loss on the day.

The euro briefly traded above $1.33, but gains were pared headed into Europe’s stock market close, with the euro last trading at $1.3274, up 0.1 percent on the day.

In the debt market, investors pulled out of the riskiest assets, sending Greek 10-year bond yields up 75 basis points, to 10.22 percent. Portuguese equivalent bonds rose 34 basis points, to 6.59 percent.

The Greek government has failed to find buyers for its state-owned natural gas company, threatening the privatization goal set under the country’s bailout.

Market Continues to Climb, Defying Fears of a Sell-Off

The stock market rose on Wednesday, with the Dow Jones industrial average closing above 15,000 for a second day after breaching that level for the first time on Tuesday.

Scott Wren, a senior equity strategist at Wells Fargo Advisors, predicted more gains in the short term, but he also said a pullback was likely at some point because the rise in the market was beginning to overstate the improvement in the economy.

Stocks have defied predictions that a sell-off would follow the spring surge as signs emerged that growth could be set for a slowdown. The Dow and the Standard & Poor’s 500-stock index have gained every month of the year and are trading at nominal record highs.

Materials and information technology companies gained the most of the 10 industry groups in the S.& P. 500 index. Materials rose 0.9 percent, and I.T. rose 0.8 percent. The two industry groups have surged in the last month after lagging the index for the first three months of the year.

That suggests that investors are moving from the so-called defensive stocks — which offer good dividends and can grow regardless of the state of the economy — into industries that will benefit more if the economy accelerates.

The Dow industrials rose 48.92 points, or 0.3 percent, at 15,105.12. The Dow is 15.3 percent higher for the year. The S.& P. 500 index rose 6.73 points, or 0.4 percent, at 1,632.69, extending its advance for 2013 to 14.5 percent.

The Nasdaq composite index advanced 16.64 points, or 0.5 percent, to 3,413.27, putting its gain so far this year at 13 percent.

Among the stocks on the move on Wednesday, AOL plunged $3.68, or 8.9 percent, to $37.74 after the company reported earnings that fell short of the forecasts of Wall Street analysts who follow the stock. Subscription revenue fell 9 percent.

Wendy’s fell 34 cents, or 5.6 percent, to $5.78 after it reported a 2 percent rise in revenue to $603.7 million, short of the $615 million forecast of analysts.

Whole Foods climbed $9.39, or 10.1 percent, to $102.19 after the natural foods store chain said its fiscal second-quarter net income rose 20 percent. The company also raised its profit forecast for the full year.

Electronic Arts, which makes the Madden football games and SimCity, jumped $3.15, or 17.1 percent, to $21.56 after it projected profits for the current fiscal year that were higher than analysts were expecting.

In the bond market, interest rates eased. The price of the 10-year Treasury note rose 4/32 to 102 3/32, while its yield slipped to 1.77 percent, from 1.78 percent late Tuesday.

Jobs Data Ease Fears of Economic Slowdown in U.S.

By Ben Werschkul, Pedro Rafael Rosado, Channon Hodge, Erica Berenstein and Alyssa KimDeconstructing a Lift in Jobs Numbers: The Times’s Catherine Rampell on the 165,000 jobs added to the economy ahead of what is normally a spring slump.

Washington may be hitting the brakes, but the private sector is still rolling ahead, helping create nearly 200,000 jobs a month, on average, since the beginning of the year and forcing the overall unemployment rate in April down to its lowest level since the end of 2008.

Source: Bureau of Labor Statistics Job candidates waited to meet with employers at a job and internship fair in New York last week.

This push-and-pull dynamic was evident in data released Friday by the Labor Department, as private employers added 176,000 people to their payrolls even as the public sector shed an additional 11,000 workers.

The latest figures painted a somewhat brighter picture of the overall economy than had been expected as the government sharply revised upward its estimate for job creation in the previous two months. Those revisions concluded that the economy generated a robust 332,000 jobs in February, not the 268,000 originally reported, and 138,000 in March, up from 88,000.

The news sent the stock market soaring to new highs, with major stock market indexes closing up 1 percent for the day.

Still, at 7.5 percent, a slight drop from last month’s 7.6 percent, the jobless rate remains far higher than it typically would be this far into a recovery. It is also a full percentage point above the level the Federal Reserve has said it wants to see before it will consider raising interest rates from their current levels near zero.

As a result, most experts expect the economy to continue to be buffeted by countervailing factors in the months ahead, with business activity and the Fed providing a healthy measure of support for growth even as fiscal austerity in Washington makes a substantial drop in the unemployment rate unlikely.

“The drag from the government sector is quite substantial,” said Gregory Daco, senior principal economist at IHS Global Insight. “Given the fiscal headwinds, the private sector is doing O.K.”

Despite repeated fears of a double-dip recession, an economy that has endured a spring swoon for three consecutive years and other potential perils, the country’s rate of job creation has been remarkably steady, if subdued. Over the last three years, the economy has added an average of 162,000 jobs a month, within a hairbreadth of April’s pace, at least as initially estimated, of 165,000 new jobs.

But experts have been warning that the economy and job creation are likely to slow in the second quarter, largely as a result of fiscal tightening in Washington. Payroll taxes increased in January, and the effect of across-the-board spending cuts mandated by Congress is expected to be felt more broadly in the months ahead.

While the private sector has been on the upswing since last summer, cutbacks in government employment continue to prevent a stronger acceleration in the economy, economists said.

“If it weren’t for the government, the economy would be stronger,” said Mr. Daco, citing the spending cuts hitting now, as well as the higher Social Security deductions for all workers and increased income taxes for top earners that began in January.

On the other hand, he said, “If the Fed hadn’t loosened monetary policy, we’d be seeing weaker growth. Both sides are generating opposing forces.”

Even though job growth now looks better, continued strains in the economy and data this week showing inflation over the last 12 months running at a low 1 percent rate suggest that the Fed is not likely to slow its $85 billion in monthly bond purchases intended to stimulate the economy for at least the next few months. On Wednesday, the Fed said it was “prepared to increase or reduce the pace of its purchases,” depending on the outlook for the labor market and inflation.

The White House was quick to highlight Friday’s report, even as it warned of the potential dangers from the fiscal squeeze.

“While more work remains to be done, today’s employment report provides further evidence that the U.S. economy is continuing to recover from the worst downturn since the Great Depression,” Alan Krueger, chairman of President Obama’s Council of Economic Advisers, said in a statement. Mr. Krueger urged Congress to replace automatic budget cuts with a more balanced approach. “Now is not the time for Washington to impose self-inflicted wounds on the economy,” he said.