Stocksdropsharplyonfedstimulusfears

U.S. economy can stand on its own.

The problem f or investors, however, has been to w ei gh how much of this year's r api d stock r al l y has been boosted by the Fed's $85-billion-a-month bond purchases. The central bank's bond purchasing, known as quantitative easing, has pushed down interest rates to make borrowing cheaper and stimulate growth.

But the Fed's buying has made bonds less attractive, pushing investors into riskier assets such as stocks.

"I nvestor s are somewhat confused — they're getting mixed signals," said Alan Whitman, managing director at Morgan Stanley Wealth Management in Pasadena. "You're kind of damned if you do, damned if you don't."

Yi el ds on the benchmark 10-year Treasury bond rose to 2.77% on Thursday from 2.71% the previous day, their highest level in two years, according to Tradeweb.

Despite recent losses in stocks, the Dow was st i l l up more than 15% f or the year.

Invest or s have also been spooked by some corporate news.

Discount giant WalMart Stores Inc. was so pessimistic about the economic outlook for the next few months t h at i t cu t both i ts pr ofi t and revenue forecasts for the full year. Its second-quarter r esul t s al so missed Wall Street expectations. This week, department stor e chains Kohl's and Macy's al so slashed t hei r predictions f or the remainder of t he year.

Retail sales have been uninspiring, rising 0.2% in July, the U.S. Commerce Department said Tuesday. It was t he measure's four th st r aight gain, but Wall Street had expected a better performance.

Analysts said the effects of January's payroll tax hikes are starting to filter into consumers' spending patterns, as are the aftershocks of government furloughs, mild employment gains and minimal income growth. Many Americans spent last month making small discretionary purchases instead of jumping for big-tag buys.

"This isn't a robust recovery," Ablin said. "Thi s is pr obably among the weakest economies that you could justify tapering in."

RepublicofthePhilippines

LocalCivilRegistry Province:PAMPANGA Municipality:ARAYAT