Editor’s Note: This article was originally published yesterday.
This morning, the Dow Jones Industrial Average moved as high as 155 points before starting its descent and ending the day down 80 points, or 0.52%. The other two major indexes also followed a similar path and both ended the day in the red. The S&P 500 lost 0.83% while the Nasdaq closed the day down 1.11%.
One catalyst for the move higher this morning was news that existing home sales in April rose higher by 0.6%, average time on market fell during the month, and prices increased. It was also reported that applications for mortgages and refinancing dropped for the second week in a row, which is clearly not a good sign.
But the real reason stocks fell today came from Ben Bernanke and the Federal Reserve. In his testimony in front of Congress this morning, he hinted that the Fed’s bond-buying program may soon begin to slow. And while investors didn’t like hearing that from the Fed chairman, they really didn’t like reading it in the Fed’s last meeting minutes, which were released this afternoon, that a number of Fed members pushed for a slowdown at the last meeting. Investors’ fears that the days of cheap money and Fed-induced stock market rally may be coming to an end sent stocks falling.
A few Dow losers
Merck & Co., Inc. (NYSE:MRK) also announced today that it would be buying back additional shares. The company plans to spend $5 billion on almost 100 million shares that Goldman Sachs owns. While 100 million share buyback sounds great, Merck & Co., Inc. (NYSE:MRK) has 3.02 billion shares outstanding so, although this move will reduce float, the company could have spent the money in a wiser way. Merck & Co., Inc. (NYSE:MRK) has been facing a number of headwinds as major drugs fall off patent protection and with $16 billion in cash but slightly more than $20 billion in debt, shareholders would likely have been better off if the company held on to the $5 billion or paid down some of its debt.
Telecom giant Verizon Communications Inc. (NYSE:VZ) saw shares decline by 1.15% today as a large amount of news surrounded the stock. Verizon Communications Inc. (NYSE:VZ) announced that it would be partnering with Jennifer Lopez, who is planning on opening a number of wireless retail stores around the country in an effort to appeal to the Latino market. Another story that likely played a role in the declining share price was that while Verizon Communications Inc. (NYSE:VZ) may have the largest LTE Network, rival AT&T Inc. (NYSE:T) was crowned with the fastest. The experts at TechHive conducted their annual survey and found that for the second year in a row AT&T had the fastest network, averaging download speeds of 13.15 mbps and 6.45 mbps for uploads.
The article Stocks Fall on Fear That Cheap Money May End Soon originally appeared on Fool.com and is written by Matt Thalman.
Fool contributor Matt Thalman has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Check back Monday through Friday as Matt explains what caused the Dow’s winners and losers of the day, and every Saturday for a weekly recap. Follow Matt on Twitter: @mthalman5513.
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