While you were sleeping Wall Street slips from record

The Dow Jones Industrial Average was steady, after earlier in the session climbing to a record high, as investors digested mixed economic data and the Federal Reserve's decision to begin easing its pace of bond-buying.

The Fed said yesterday it will cut back its bond purchases to US$75 billion a month from US$85 billion next month. Both the Dow and the Standard & Poor's 500 Index closed at record highs yesterday.

In afternoon trading in New York today, the Dow was little changed, after earlier hitting an intraday record high of 16,176.68. Gains in shares of Chevron and Walt Disney offset declines in shares of General Electric and Microsoft.

The Standard & Poor's 500 Index was down 0.13 percent, while the Nasdaq Composite Index shed 0.33 percent.

"The market is adjusting after the rally yesterday," Doug Foreman, co-chief investment officer of Kayne Anderson Rudnick Investment Management, told Reuters. "It's been a strong year, and I wouldn't be surprised if investors closed out their year today or tomorrow since there isn't much room or news to move higher from here until next year,"

In 2013 so far, the Dow has gained 27 percent, while the S&P 500 rose 29 percent and the Nasdaq has strengthened 36 percent.

The latest economic data were mixed. Initial claims for state unemployment benefits rose 10,000 to a seasonally adjusted 379,000 last week, the highest level since March, according to a Labor Department report.

Meanwhile, sales of previously owned homes fell 4.3 percent in November to an annual rate of 4.90 million units, according to a report by the National Association of Realtors.

"Home sales are hurt by higher mortgage interest rates, constrained inventory and continuing tight credit," Lawrence Yun, NAR chief economist, said in a statement. "There is a pent-up demand for both rental and owner-occupied housing as household formation will inevitably burst out, but the bottleneck is in limited housing supply, due to the slow recovery in new home construction. As such, rents are rising at the fastest pace in five years, while annual home prices are rising at the highest rate in eight years."

Separately, the Conference Board's index of leading indicators climbed 0.8 percent in November, following a 0.1 percent gain in October.

Shares of Facebook fell, last down 1.9 percent, after the company said it will sell 70 million shares including about 41 million shares by Chief Executive Officer Mark Zuckerberg.

"It's never a positive sign when insiders are dumping massive quantities of stock," Todd Lowenstein, a portfolio manager with Highmark Capital, told Bloomberg News. Yet "the company is now being added to the S&P 500 Index so there will be large demand for the shares from index buying and index hugging money managers. So it seems this will be absorbed without much disruption."

In Europe, the Stoxx 600 Index ended the day with a 1.7 percent climb from the previous close, as did Germany's DAX. The UK's FTSE 100 gained 1.4 percent, while France's CAC 40 rose 1.6 percent.

(BusinessDesk)

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