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U.S. Department of Labor

Dow's record Tuesday streak comes to an end

Rachel Huggins
USA TODAY
Specialist Joseph Mastrolia, left, works with traders at his post on the floor of the New York Stock Exchange.
  • Dow had closed higher for the past 20 consecutive Tuesdays
  • All eyes on Friday%27s monthly employment report
  • Europe erases losses%2C Asian markets end mixed

Stocks fell Tuesday, ruining what many had thought might be a record 21 straight Tuesdays of the Dow Jones industrial average closing in the green.

The Dow fell 76.49 points, or 0.5%, to close at 15,177.54. The Dow had closed higher for the past 20 Tuesdays in a rare and unprecedented streak that is the best since at least 1900, according to Bespoke Investment Group.

"The unbelievable streak of positive Tuesdays is over," sighed Schaeffer's Investment Research's senior equity analyst Joe Bell.

The broader Standard & Poor's 500 index dropped 9.04 points, or 0.6%, to 1,631.38 and the Nasdaq composite index fell 20.11, or 0.6%, to 3,445.26.

The afternoon downdraft coincided with the release of the text of a speech by Esther George, president and CEO of the Federal Reserve Bank of Kansas City and a member of the Federal Open Market Committee, which determines central bank monetary policy.

In the speech, George said she is in support of "slowing the pace of asset purchases as an appropriate next step for monetary policy." While she acknowledged her views are not shared by the "majority" of the voting members of the FOMC, it created fresh uncertainty about when the Fed will start dialing down its stimulus.

The market has turned volatile in the last two weeks as traders parse statements from Federal Reserve officials in an effort to anticipate when the central bank will reduce its $85 billion in monthly bond purchases. That has helped keep bond prices high and the yield, or interest, they pay low. The Fed's goal is to stimulate the economy by encouraging borrowing and investing with low interest rates.

Many investors expect long-term interest rates to rise when the Fed eases back on its bond purchases, which would have many repercussions for markets. More investors would likely be tempted to buy bonds instead of stocks once bond yields rise.

The current yield of 2.14% on the benchmark 10-year Treasury note is extremely low by historical standards. It matches the average dividend payment of 2.14% for stocks in the S&P 500.

Cautious investors are edgy ahead of the eagerly awaited May employment report due out Friday despite encouraging news about the housing market that moved stocks higher earlier in the trading session.

"We are going nowhere fast," said Jim Paulsen, chief investment strategist at Wells Capital Management in Minneapolis. "You gotta believe that people are getting ready for the end of the week."

The Labor Department releases its closely watched monthly jobs survey on Friday. A strong report would normally send the stock market up. But this time around, investors are also trying to guess when the Federal Reserve may start pulling back its support for the economy.

In economic news, real estate data provider CoreLogic reported Tuesday that home prices jumped 12%in April from a year earlier, the biggest gain since February 2006. The government reported that the country's trade deficit in April was narrower than economists had expected.

The price of crude oil fell 10 cents to $93.35 a barrel and gold fell $14 to $1,398 an ounce.

On Monday, the Dow closed up 0.9% to 15,254.03. The S&P 500 index rose 0.6% to 1,640.42. The Nasdaq composite index climbed 0.3% to 3,465.37.

Asian markets were mixed Tuesday. Japan's Nikkei 225 index rose 2.1% to 13,533.76. In mainland China, Shanghai Composite benchmark fell 1.2% to 2,272.42.

In Europe, Britain's FTSE 100 index closed up 33.46 points, 0.5%, to 6,558.58. Germany's DAX 30 index rose 10.16 points, 0.1%, to finish at 8,295.96, and France's CAC 40 index ended up 5.16 points, 0.1%, to 3,925.83.

Contributing: USA TODAY's Adam Shell, The Associated Press

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