By Steve Rothwell
The Associated Press
NEW YORK — Concerns about the strength of the economy and the potential for a budget fight in Washington pushed down the stock market Monday.
The Dow Jones industrial average and the Standard & Poor’s 500 index fell for a third straight day.
Investors initially cheered the Federal Reserve’s decision last Wednesday to keep its huge stimulus program in place. But they’ve since focused on the central bank’s gloomier outlook for growth.
William Dudley, the President of the Fed’s New York Branch said Monday that while the economy was improving, “the headwinds” created by the financial crisis were only easing slowly.
“At first blush (the stimulus) looks positive,” said Kate Warne, an investment strategist at Edward Jones, a financial advisor. “But at second blush, it says conditions weren’t as strong as we were previously thinking. Markets are now responding to that.”
The Dow jumped 147 points last Wednesday to close at an all-time high. But the gain from that rally has been erased.
On Monday, the S&P 500 index dropped 8.07 points, or 0.5 percent, to close at 1,701.84. The index was fractionally lower than its level before the Fed’s decision last Wednesday.
The Dow fell 49.71 points, or 0.3 percent, to 15,401.38 The Nasdaq composite fell 9.44 points, or 0.3 percent, to 3,765.29.
Financial stocks fell the most among the 10 industrial groups in the S&P 500 index. Investors sold financial stocks on concerns that their earnings would be hurt by lower trading volumes of bonds and foreign currencies.