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VOL. 37 | NO. 49 | Friday, December 06, 2013

US stocks lower, setting up 3rd day of declines

JOSHUA FREED, AP Business Writer

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Lower stock prices on Thursday set up investors for a third day in a row of declines.

Stocks have risen sharply this year, and some analysts have been saying buyers may be getting more choosy. Also, some are worried that a recovering U.S. economy suggests that the Federal Reserve may wind down its stimulus, which has helped lift stock prices.

The Dow Jones industrial average was down 125 points, or 0.8 percent, at 15,719 as of 12:45 p.m. Eastern time. The Standard & Poor's 500 index was down almost nine points, or 0.5 percent, at 1,774. The Nasdaq composite fell seven points, or 0.2 percent, to 3,997.

Stocks posted their biggest declines in five weeks on Wednesday, but the Dow is still up 20 percent for the year, and the S&P 500 is up 24 percent.

"We don't think we're in a bubble, however, we do know we're in an expensive market," said Marty Leclerc, chief investment officer and portfolio manager at Barrack Yard Advisors.

Leclerc said indices have risen 50 percent over the past couple of years, while earnings are up 12 percent, so it "wouldn't be unusual to have a step backwards even in the confines of a bull market run," he said.

In economic news, the number of people seeking unemployment benefits rose to about where it was before the Great Recession.

Also, U.S. shoppers spent more money on appliances, furniture and cars in November. Spending had been muted for months heading into the crucial holiday shopping period, a worrisome sign for investors. Retail sales rose 0.7 percent last month, the biggest gain in five months. October sales were also revised higher.

Facebook jumped $1.90, or 4 percent, to $51.28 after the stock was added to the S&P 500 index.

Lululemon Athletica plunged $7.43, or 11 percent, to $60.91 after the upscale yoga clothing maker said a sales will be flat in the next quarter, and revenue for the year will be less than it had predicted. Several gaffes have hurt sales of its $100 yoga pants and other products. In the spring Lululemon pulled some of its pants from stores after complaints that they became see-through. Two days ago, founder Chip Wilson stepped aside as chairman, and the company named a new CEO.

Hilton Worldwide, the world's largest hotel company, jumped $1.65, or 8 percent, to $21.65 on its first day of trading. The company raised $2.35 billion in its initial public offering, more than the $2.1 billion generated by Twitter's IPO last month.

Airlines rose, led by Southwest Airlines Co., which gained by 57 cents, or 3.3 percent, to $18.54 after an upgrade by an analyst at Bank of America Merrill Lynch. United Continental Holdings Inc. rose 73 cents, or 2 percent, to $37.31.

Networking company Ciena fell $1.82, or 8 percent, to $21.08 after quarterly earnings and its first-quarter outlook came in lower than expected.

Stocks were lower in Europe, too, including a decline of almost 1 percent in Britain's FTSE.

The yield on the 10-year Treasury note rose to 2.88 percent, from 2.85 percent on Wednesday.

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