2013.06.1501:00:28UTC+00U.S. stocks decline for third week in four ahead of fed

U.S. stocks retreated on Friday, chalking up a third weekly loss in four, with investors on guard ahead of next week’s financial-policy decision by the Federal Open Market Committee.

“We didn’t get the pullback in May when we thought we would, so it looks like June is giving us some of that,” said Andrew Fitzpatrick, director of investments at Hinsdale Associates Inc.

A day after Wall Street rallied on thinking the Federal Reserve would continue record-low interest rates, investors took a cautious stance on the final session of a losing week.

The FOMC holds a two-day policy gathering next week, with Fed Chairman Ben Bernanke due to hold a news conference Wednesday, after the FOMC decision.

Wall Street is tracking economic reports for clues as to whether the economy is strong enough to withstand the much-talked of tapering of Fed stimulus, specifically its $85 billion in monthly bond purchases.

“The economy is not where it needs to be for the Fed to cut off stimulus, with inflation coming in under their target and with the jobs report still not being really strong, it still leaves room for the Fed to maintain its policies,” said Fitzpatrick.

On Friday, the Fed was advised to step carefully in scaling back from its financial easing by the International Monetary Fund, which also trim its U.S. growth outlook for next year to 2.7% from the 3% projected in April.

After surging 29 points and slumping 131, the Dow Jones Industrial Average missed 105.90 points, or 0.7%, to 15,070.18.

Down 1.2% for the week, the Dow on Friday made its fourth consecutive triple-digit move.

A day after its best session since Jan. 2, the S&P 500 index retreated 9.63 points, or 0.6%, to 1,626.73, with financials pacing the losses that included all but one of its 10 major sectors.

The S&P 500 closed with a 1% weekly drop.

The Nasdaq Composite shed 21.81 points, or 0.6%, to 3,423.56, leaving it off 1.3% from last Friday’s close.

Down movers ran ahead of advancers on the New York Stock Exchange, where nearly 626 million shares traded. Composite volume neared 2.9 billion.

Energy prices rose, with crude-oil futures climbing to highs not seen since September, up $1.82 at $97.85 a barrel on the New York Mercantile Exchange. Gold also gained, with futures rising $9.80 to close at $1,387.60 an ounce.

Treasury prices advanced, with the yield on the 10-year note used in determining mortgage rates and other consumer loans down to 2.131%.

Cable stocks were among the more active issues, with Time Warner Cable Inc. up 8.1% after CNBC reported it held discussions with Liberty Media Corp. about industry consolidation, including a possible union between Time Warner Cable and Charter Communications Inc., in which Liberty Media holds a large stake.

Groupon Inc. jumped almost 12% after the daily-deals site drew an upgrade by Deutsche Bank AG.

Smith & Wesson Holding Corp. rose 5.2% after the gun manufacturer reported initial earnings above expectations.

Smithfield Foods Inc.’s shares held steady after the hog producer reported a steep drop in net profit.

Reports Friday had the preliminary June reading of the University of Michigan/Thomson Reuters consumer-sentiment gauge declining from a six-year high to 82.7 from a final May reading of 84.5.

And, ahead of Wall Street’s start, stock-index futures retained mild losses after the Labor Department reported producer prices rose 0.5% in May, the first increase in three months, and then a separate report had U.S. industrial production unchanged in May.

On Thursday, late-session gains kicked in after Wall Street Journal reporter Jon Hilsenrath, considered an influential voice on central-bank policy, said Bernanke will likely choose next week’s meeting to try to soothe market fears that the Fed is headed towards the easing exit in a hurry.

“It’s been a roller coaster, certainly in the last few days. I think people are comforted by thinking the Fed is not set to make any changes. There’s a lot of talk, but no action. The market is still unsure, but leaning towards no action,” said Fitzpatrick at Hinsdale Associates.