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NEW YORK: US stocks fell on Friday as investors took profits from recent gains and fretted about the global economic recovery following India's surprise interest rate hike.
After opening with small gains, the Dow Jones Industrial Average fell 37.19 points (0.35 percent) to finish at 10,741.98, snapping an eight-session rally that had brought the blue-chip index to an almost 18-month high.
The tech-rich Nasdaq composite shed 16.87 points (0.71 percent) at 2,374.41 while the broad-market Standard & Poor's 500 index retreated 5.92 points (0.51 percent) to 1,159.90.
The major indices spent almost the entire session in negative territory and closed better than lows hit in the final hour of trade amid the quarterly expiration of futures and options contracts, known as the "quadruple-witching" hour.
Stocks extended losses "after the central bank of India made an intra-meeting move to raise interest rates, and traders viewed the action as a reminder that strong economic growth can bring the potential for rate hikes, which tend to give stock markets indigestion," Charles Schwab & Co. analysts said in a client note.
Traders "used the action as an excuse to book profits after a nice run," they said.
The Reserve Bank of India said as part of its exit strategy from extraordinary support measures taken in the face of the global economic crisis, it was raising two repo rates by a quarter of a percentage points to curb rising inflationary pressures, "with immediate effect."
"Given the lags in monetary policy, it is better to respond in a timely manner, even if it is outside the scheduled policy reviews, than take stronger measures at a later stage when inflationary expectations have accentuated," the central bank said in a statement.
Among stocks in the spotlight on Friday, struggling handheld device maker Palm plunged 29.16 percent to 4.00 dollars. It reported another quarterly loss after the market close Thursday and gave disappointing guidance.
Google dropped 1.12 percent to 560.03 dollars. According to China Business News, the Internet giant will end operations in China on April 10, citing an official with an unidentified Chinese advertising agency, making good on its threat in January to pull out because of censorship and cyber attacks.
Google's Chinese rival Baidu climbed 0.88 percent to 569.65 dollars.
Boeing slipped 0.21 percent to 70.72 dollars. The aerospace giant said it would ramp up production on 777 and 747-8 planes to support an anticipated increase in customer demand as the aviation market rebounds amid a global economic recovery.
Electronics retail chain Best Buy added 1.33 percent at 40.99 dollars after a Goldman Sachs analyst upgrade.
The bond market weakened. The yield on the 10-year US Treasury bond rose to 3.687 percent from 3.672 percent on Thursday and that on the 30-year bond rose to 4.579 percent from 4.572 percent. Bond prices and yields move in opposite directions. - AFP/de
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