(Corrects share price on Berry Petroleum in last paragraph to
$44.95, from $444.95)
* Initial claims rise, CPI flat
* Philly Fed well below expectations
* Wal-Mart climbs after earnings
* Indexes off: Dow 0.46 pct, S&P 0.68 pct, Nasdaq 0.82 pct
By Chuck Mikolajczak
NEW YORK, Feb 21 (Reuters) - U.S. stocks declined on
Thursday as a ream of weak economic data did little to assuage
some investors' concerns that the Federal Reserve may rein in
its economic stimulus measures and amid uncertainty over ongoing
budget talks in Washington.
The number of Americans filing new claims for unemployment
benefits rose last week and consumer prices were flat in
January, buttressing the argument for the Fed to continue its
accommodative monetary policy.
On Wednesday, minutes from the U.S. Federal Reserve's most
recent meeting suggested the central bank may slow or stop
buying bonds sooner than expected. The news sent shares lower
and the benchmark S&P 500 index dropped 1.2 percent, its biggest
decline since Nov. 14.
The Fed has used quantitative easing, or QE, since 2008 in a
bid to stimulate the economy. The policy, which involves
expanding the Fed's balance sheet to buy bonds, has been
credited with pushing money into the stock market, and its
withdrawal would remove a ballast for the markets.
The benchmark S&P index has dropped 1.9 percent over the
past two sessions but is still up more than 5 percent for the
year. That's led many analysts to believe that the Fed minutes,
the upcoming sequestration in Washington and sluggish consumer
spending may be triggers for an overdue pullback in equities.
The sequestration - automatic across-the-board spending cuts
put in place as part of a larger congressional budget fight -
are due to kick in March 1 unless lawmakers agree on an
"It's the sequester, it's the knee-jerk reaction to
yesterday's Fed minutes and it's the realization the consumer is
slowing," said Phil Orlando, chief equity market strategist, at
Federated Investors, in New York.
"I'd love to see a healthy 5 percent correction; let's wash
out some of the weak hands and set up for a better move during
Financial data firm Markit said its "flash," or preliminary
U.S. Manufacturing Purchasing Managers Index slowed to 55.2 this
month from 55.8, which had been the best showing since April,
Wal-Mart Stores Inc, seen as a gauge of consumer
spending, said U.S. sales weakness persisted into early
February, as Americans absorbed the impact of higher payroll
taxes and gasoline prices, along with slow tax refunds that put
some spending on hold. But shares rose 2.2 percent to $70.73 to
help curb declines on the Dow as earnings topped expectations.
The Dow Jones industrial average dropped 64.01
points, or 0.46 percent, to 13,863.53. The Standard & Poor's 500
Index lost 10.33 points, or 0.68 percent, to 1,501.62.
The Nasdaq Composite Index fell 25.93 points, or 0.82
percent, to 3,138.48.
In a positive sign, data showed home resales edged higher in
January and left inventory of homes at its lowest level in 13
years as the housing market continues to steadily improve.
But the Federal Reserve Bank of Philadelphia said its index
of business conditions in the U.S. Mid-Atlantic region fell in
February to minus 12.5, the lowest level in eight months, from
minus 5.8 in January.
VeriFone Systems Inc tumbled 37.7 percent to $19.86
after the credit card swipe-machine maker forecast first and
second-quarter profit that were well below analysts'
According to Thomson Reuters data through Thursday morning,
of the 427 companies in the S&P 500 that have reported results,
69.3 percent have exceeded analysts' expectations, compared with
a 62 percent average since 1994 and 65 percent over the past
Fourth-quarter earnings for S&P 500 companies are estimated
to have risen 5.9 percent, according to the data, above a 1.9
percent forecast at the start of the earnings season.
Berry Petroleum Co jumped 16.5 percent to $44.95
after oil and gas producer Linn Energy LLC said it
would buy the company in an all-stock deal valued at $4.3
billion including debt. Linn Energy shares advanced 3 percent to
(Editing by Bernadette Baum)