* Fed cuts 2009 GDP view, long-run forecast unchanged
* Financials drag on profit-taking
* McDonald's, P&G rise after analyst comments
* Indexes off: Dow 0.6 pct, S&P 0.5 pct, Nasdaq 0.4 pct
For up-to-the-minute market news click [STXNEWS/US]
(Updates with volume in final paragraph)
By Edward Krudy
NEW YORK, May 20 U.S. stocks fell on Wednesday,
led by financials in a late-stage sell-off, after the Federal
Reserve gave a more pessimistic view on the economy, tempering
hopes for a quick recovery.
The Fed cut its 2009 forecast for gross domestic product
and raised its outlook for unemployment, undercutting recent
optimism that the economy might be turning the corner.
Financial shares had led the market higher in morning
trading after a successful share offering from Bank of America
(BAC.N) boosted optimism about the sector, but they reversed
course as investors booked profits. Shares of Goldman Sachs
(GS.N) fell 3.3 percent to $136.44 and JPMorgan (JPM.N) lost
3.5 percent to $34.55. The KBW bank index .BKX lost 2.7
"It sounds as though they (the Fed) are a little less
excited about the economy than they were originally or as we
were led to believe," said Paul Nolte, director of investments
at Hinsdale Associates in Hinsdale, Illinois. "It's certainly
not encouraging of the green shoots that everybody else is
Technology shares were also a negative as Hewlett-Packard
(HPQ.N), the world's biggest PC maker, gave a disappointing
outlook for 2009. The stock fell 5.22 percent to $34.67 and was
the biggest drag on the Dow.
The Dow Jones industrial average .DJI fell 52.57 points,
or 0.62 percent, at 8,422.28. The Standard & Poor's 500 Index
.SPX lost 4.64 points, or 0.51 percent, at 903.49. The Nasdaq
Composite Index .IXIC was off 6.70 points, or 0.39 percent,
Energy stocks also lost ground even as crude oil surged.
Shares of Exxon Mobil (XOM.N) fell 1.3 percent to $69.61 and
was among the Dow's top drags.
But stocks considered to be defensive plays were among
gainers, including consumer staples and healthcare.
McDonald's (MCD.N) rose 4.4 percent to $56.25 and was the
biggest boost to the Dow after Deutsche Bank recommended a
"buy" on the world's biggest fast-food chain. Procter & Gamble
Co (PG.N), the maker of Tide laundry detergent and Pampers
diapers, rose 2 percent to $54.02 after Barclays raised the
stock to "overweight."
On the healthcare front, Merck & Co (MRK.N) rose 1.2
percent to $26.09, making it one of the standouts on the Dow.
On Nasdaq shares of big cap tech stocks were among the top
drags following the disappointment from Hewlett-Packard, a
technology bellwether. Apple Inc (AAPL.O) fell 1.2 percent to
$125.87, while Google Inc (GOOG.O) fell 0.4 percent to 397.18.
U.S. front-month crude CLc1 settled up 3.2 percent to $62
per barrel on New York Mercantile Exchange.
Trading was active on the New York Stock Exchange, with
about 1.65 billion shares changing hands, above last year's
estimated daily average of 1.49 billion, while on Nasdaq, about
2.30 billion shares traded, above last year's daily average of
Advancing stocks outnumbered declining ones on the NYSE by
1,591 to 1,452 while decliners beat advancers on the Nasdaq by
1,453 to 1,239.
(Editing by Leslie Adler)