US STOCKS-Wall St eases after Fed-fueled rally

Thu Sep 19, 2013 2:26pm EDT

Related Topics

* Tesla shares hit record after bullish brokerage note

* JPMorgan slips; bank to pay regulators $920 million in penalties

* Agilent jumps, to spin off part of its business

* Dow off 0.21 pct, S&P down 0.22 pct, Nasdaq up 0.06 pct

By Chuck Mikolajczak

NEW YORK, Sept 19 (Reuters) - U.S. stocks pulled back slightly on Thursday in the wake of the Federal Reserve's surprise decision to maintain its stimulus intact, which had pushed the S&P 500 to a record high.

Major U.S. stock indexes oscillated between modest gains and losses after Wednesday's rally. Many market participants had expected the Fed to announce it would begin to trim its stimulus, but the central bank instead said it would continue buying $85 billion in bonds every month.

The program has been instrumental in lifting the benchmark S&P index 20 percent this year while keeping Treasuries yields under pressure.

"People are reconsidering (the Fed decision)," said Peter Jankovskis, co-chief investment officer at OakBrook Investments LLC in Lisle, Illinois. "(The market) may be coming around to the view the Fed is a little worried, the economy isn't as strong as some people were thinking."

The Fed said it wants more evidence of solid economic growth before beginning to withdraw its stimulus. Data on Thursday showed factory activity in the U.S. mid-Atlantic region increased by the most in more than two years and firms' optimism about the future hit a 10-year high.

A Reuters poll of 17 primary bond dealers on Wednesday found that nine were now looking for the U.S. central bank to trim its bond purchases in December, but most said their forecasts were very far from certain.

News that the Fed would delay winding down its stimulus until it had more evidence of solid economic growth boosted global equity markets on Thursday, especially emerging markets, as investors returned to riskier assets.

The Dow Jones industrial average fell 33.02 points or 0.21 percent, to 15,643.92, the S&P 500 lost 3.76 points or 0.22 percent, to 1,721.76 and the Nasdaq Composite added 2.086 points or 0.06 percent, to 3,785.727.

The S&P hit 1,729.86, a record intraday high. The broad benchmark and the 30-stock Dow industrials closed at record highs Wednesday, while the Nasdaq Composite closed at its highest in 13 years.

JPMorgan Chase & Co, fell 1.5 percent to $52.63 after the biggest U.S. bank agreed to pay approximately $920 million in penalties to regulators in two countries to settle some of its potential liabilities from its $6.2-billion "London Whale" derivatives loss last year, according to terms made public on Thursday. The KBW bank index fell 1.5 percent.

Shares of Tesla Motors hit a record high of $179.69, boosted in part by an upbeat note from analysts at Deutsche Bank. Shares of the electric car maker were recently up 8 percent at $179.46.

Agilent Technologies was one of the best performers on the S&P 500 after the company said it will spin off its electronic measurement business to focus on its fast-growing healthcare business. The stock gained 3.7 percent to $51.14.

Oracle Corp forecast sales and profit for its second quarter that fell short of expectations as it continues to battle soft global IT demand and smaller rivals. Its shares slipped 0.5 percent to $33.70.

Rite Aid Corp shares surged 19.9 percent to $4.45 after the drugstore chain raised its profit forecast for the current year after reporting a fourth straight quarterly profit.

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