Traders work on the floor of the New York Stock Exchange on Tuesday. (Richard Drew / Associated…)
NEW YORK --Stocks fell sharply as investors digested an upbeat report on the labor market but weak signals from retail giant Wal-Mart.
Major U.S. indexes slumped more than 1.3% in early trading on Wall Street. The Dow Jones industrial average fell 223.24 points, or 1.46%, to 15,114.42. So far this month, the Dow is off 2.4%.
The broader Standard & Poor's 500 index dropped 23.65 points, or 1.4%, to 1,661.74. The technology-heavy Nasdaq composite index slid 59.49 points, or 1.62%, to 3,609.78.
The stock market's strong rally this year has been fueled by encouraging signs the U.S. economy is gaining strength. But at the same time, that growth has fueled anxiety over when the Federal Reserve will begin closing its spigot of easy money.
The Fed's stimulus has helped fuel a strong rally in stocks this year, lifting them more than 15%, even after the recent pullback. Fed officials have signaled that the central bank may move to scale back, or "taper" its stimulus as early as September if the economy is sufficiently on the mend.
“Investors are waking up to the reality that this is going to be happening, and September is not very far away," said Jack Ablin, chief investment officer at BMO Private Bank.
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Investors also were greeted with bad news for consumers: Wal-Mart Inc.'s earnings missed Wall Street expectations, and the retail giant lowered its prospects for growth this year.
“This isn’t a robust recovery," Ablin said. "This is probably among the weakest economies that you could justify tapering in."
The Fed's stimulus, known as quantitative easing, has pushed investors into riskier assets like stocks. The central bank's bond purchasing -- at $85 billion a month -- has pushed down interest rates to make borrowing cheaper.
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