Traders work on the floor of the New York Stock Exchange, August 14, 2012.BRENDAN MCDERMID/Reuters
Stocks slid into the close on Monday after a disappointing report on U.S. consumer borrowing added to the economic gloom ahead of a much-anticipated monetary policy statement from the Federal Reserve later this week.
The Dow Jones industrial average closed at 13,254.29, down 52.35 points or 0.4 per cent. The broader S&P 500 closed at 1429.08, down 8.84 points or 0.6 per cent. In Canada, the S&P/TSX composite index closed at 12,215.43, down 52.58 points or 0.4 per cent.
The declines follow last week's strong rally – which drove the S&P 500 to its highest close since the start of 2008 – after the European Central Bank announced a plan to buy unlimited quantities of government bonds from financially distressed European countries in an effort to blunt the impact of the ongoing sovereign-debt crisis.
On Thursday, the Federal Reserve will deliver its own plan to deal with the sluggish U.S. economy. Many observers are expecting the central bank to provide some form of stimulus, either by extending the date in which it is promising to keep its keep interest rate at an exceptionally low level, or through outright bond-buying using using a strategy known as quantitative easing.
Expectations of Fed action follow a number of disappointing economic reports. On Friday, the U.S. Labor Department reported job gains of just 96,000 in July, which was well below expectations.
On Monday, the Fed reported that U.S. consumer borrowing fell in July for the first time in a year. Economists had been expecting borrowing to rise by $9.2-billion (U.S.) but instead fell by $3.3-billion.
American International Group Inc. fell 2 per cent after the U.S. government said it would sell $18-billion (U.S.) worth of shares to institutional investors, reducing the government's stake in the insurer after rescuing it in a 2008 bailout.
However, other financials were also weak: Bank of America Corp. fell 2.5 per cent.
Intel Corp. fell 3.8 per cent, continuing last week's slide after the chip maker cut its sales guidance for the current quarter.
Talisman Energy Inc. rose 1.6 per cent after John Manzoni agreed to step down as chief executive in favour of Hal Kvisle.
BCE Inc. rose 0.2 per cent after it said it would launch an online streaming service to compete against Netflix Inc.
David Berman