US STOCKS-Wall St edges down as investors look for clues on Fed

Wed Dec 4, 2013 1:22pm EST

* Investors unsure of timing for Fed's tapering

* ADP employment report tops expectations

* Express tumbles after earnings, outlook

* OmniVision slumps after revenue forecast

* Indexes down: Dow 0.3 pct, S&P 0.3 pct, Nasdaq 0.2 pct

By Caroline Valetkevitch

NEW YORK, Dec 4 (Reuters) - U.S. stocks edged lower in choppy trading on Wednesday, with the S&P 500 falling for a fourth session in a row, as U.S. economic data sparked speculation on how soon before the Federal Reserve starts to wind down its stimulus program.

An ADP National Employment Report, which showed private employers added 215,000 jobs in November and topped economists' expectations, was among the latest reports suggesting the economy's outlook was brightening.

Many market participants expect the Fed to announce a cut to its $85 billion in monthly bond purchases in March, referred to as tapering, but recent economic data increased expectations the move may come sooner.

The benchmark index is on track to snap an eight-week winning streak during which it added nearly 7 percent. The recent decline came partly on concerns of an imminent wind-down of Fed stimulus.

"I'm in the camp we don't see a tapering until March," said John Buckingham, chief investment officer at Al Frank Asset Management in Aliso Viejo, California, but "I'm not a person who worries a lot about the Fed tapering."

He said tapering means the economy is improving and that, overall, is a good sign for stocks.

Among decliners, shares of clothing retailer Express Inc tumbled 23 percent to $19.01 after the company forecast quarterly earnings below analysts' estimates due to weaker-than-expected Thanksgiving sales.

The Dow Jones industrial average was down 41.74 points, or 0.26 percent, at 15,872.88. The Standard & Poor's 500 Index was down 5.35 points, or 0.30 percent, at 1,789.80. The Nasdaq Composite Index was down 6.36 points, or 0.16 percent, at 4,030.84.

Other signs of strength in the economy were figures showing the U.S. trade deficit narrowed in October and new home sales recording their biggest increase in nearly 33-1/2 years in October. The home sales report suggested the housing market recovery remains intact despite higher mortgage rates. The PHLX housing index edged up 0.05 percent.

But the economic picture was muddied after the Institute for Supply Management said its services index fell to 53.9 last month, from 55.4 in October and below a forecast for 55.0. A figure above 50 signifies expansion.

The data damped speculation the Fed would move up the timeline for a reduction in its stimulus and pushed equities into positive territory.

The Fed has said it would slow its stimulus program when certain economic measures meet its targets, including a decline in the unemployment rate.

OmniVision Technologies Inc slumped 6.5 percent to $14.99 after the chipmaker forecast current-quarter revenue well below analysts' estimates.

Oculus Innovative Sciences Inc shares surged 165.7 percent to $6.19 after receiving the go-ahead from the U.S. Food and Drug Administration for its anti-scar gel.

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