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* Energy and industrials lose ground
* Retail sales drop more than expected in Feb
* Indexes: Dow -0.45%, S&P 500 -0.28%, Nasdaq -0.18%
(Updates with afternoon trading)
By Noel Randewich
March 16 (Reuters) - Wall Street dipped on Tuesday, pulled
lower by energy stocks and threatening to put an end to a recent
rally, while investors awaited the result of the Federal
Reserve's two-day policy meeting.
The Nasdaq turned negative in afternoon trading after
earlier touching a two-week high.
The S&P 500 and Dow Jones Industrial Average closed at
record highs in the prior session as optimism about a $1.9
trillion fiscal stimulus package and ongoing vaccination drives
bolstered views that the economy was on a path to recovery.
However, stimulus and improving economic data have recently
stoked inflation worries, pushing up yields and upending equity
markets in February.
Wall Street's fear gauge .VIX hit a five-week low at 19.68
points as yields on the benchmark U.S. 10-year Treasury
US10YT=RR slipped for the second straight session to 1.59%
from a 13-month high hit last week.
Fears about an overheating economy and a jump-forward in
interest rate expectations have increased scrutiny on the Fed
meeting, where policymakers are likely to raise economic
forecasts and repeat their pledge to remain accommodative for
the foreseeable future. Investors have slightly increased their cash allocation,
deeming that inflation and 'taper tantrums' could topple the
record rally in financial markets, BofA's March fund manager
survey showed on Tuesday. "This Fed meeting is one of the most important ones for the
market in a long time. It is the first we have had after the
recent inflation rate rise and concerns about inflation," said
Tom Martin, senior portfolio manager at Globalt Investments in
Atlanta.
Data showed retail sales dropped more than expected in
February due to bitterly cold weather across the country.
Another report indicated winter storms in Texas led to a plunge
in U.S. factory output last month. At midafternoon, the Dow Jones Industrial Average .DJI was
down 0.45% at 32,805.03 points, while the S&P 500 .SPX lost
0.28% to 3,957.79.
The Nasdaq Composite .IXIC dropped 0.18% to 13,435.18.
Energy stocks .SPNY slumped 2.4% after a drop in oil
prices while financials .SPNY retreated about 1%. Technology
.SPLRCT and communication services .SPLRCL jumped about 0.5%
and 0.7%, respectively.
The Russell growth index .RLG was marginally higher versus
the Russell value index's .RLV 0.7% fall, in a slight reversal
of a recent trend away from technology and other high-growth
stocks.
Ford Motor Co F.N dropped over 4% after announcing a $2
billion convertible debt deal. Declining issues outnumbered advancing ones on the NYSE by a
1.87-to-1 ratio; on Nasdaq, a 2.65-to-1 ratio favored decliners.
The S&P 500 posted 72 new 52-week highs and no new lows; the
Nasdaq Composite recorded 214 new highs and 13 new lows.