Stocks fell as the economic optimism stoking a big rally in recent weeks ebbed, compelling investors to skim some gains off the market's 20 per cent rise since hitting a three-year low on September 21st. "There is a lot of confusion out there regarding what happens after the first of the year," said Richard Cripps, chief market strategist at Legg Mason Wood Walker. "I would come down on the view that, boy, I would be taking profits into this, but a lot of portfolio managers simply can't do that. They want to make sure they are participating in the market on the upside," he said.
Year-to-date, the Dow is down 8 per cent, the Nasdaq has fallen 19.4 per cent, and the S&P 500 is off 13.7 per cent.
Investors locked in profits after recent gains and remained cautious ahead of the US Federal Reserve's policy-setting meeting today, analysts said. The central bank is expected to cut key interest rates for the 11th time this year, bringing them down to levels unseen in 40 years. Most stock indexes are up 20 per cent to 40 per cent from this year's lows.
