By BERNARD CONDON, AP Business Writer
NEW YORK (AP) — Stocks are dropping in early trading Thursday as telephone and industrial companies continue to drag major indexes lower. Some high-dividend stocks fell for a second day as investors braced themselves for the likelihood of an interest rate increase in June at the Federal Reserve’s next policy meeting. Verizon fell 2 percent and AT&T lost 1.5 percent.
KEEPING SCORE: The Dow Jones industrial average fell 183 points, or 1 percent, to 17,344 at 11:40 a.m. Eastern time. The Standard & Poor’s 500 lost 20 points, or 1 percent, to 2,028. The Nasdaq composite fell 53 points, or 1.1 percent, to 4,686.
FED IN FOCUS: The minutes of the Fed’s last meeting, released Wednesday, weighed on markets for a second day. The news that the Fed could be ready to raise interest rates next month came as a surprise to many investors. Policymakers indicated an increase would only be made if the economy and labor market continued to strengthen.
DIVIDEND PAY: Telephone companies fell 1.3 percent, more than the rest of the market. Those stocks have outperformed the market this year because of their reliable dividends, but higher rates on bonds would diminish the appeal of those stocks to investors seeking income.
THE QUOTE: “Many of these stocks already had significant moves up and were due for a correction,” said Chief Investment Officer Henry Smith of Haverford Trust, referring to high-dividend stocks such as phone companies. “They have decent yields, but high valuations.”
RETAIL ROCKET: Wal-Mart Stores jumped 9 percent after reporting surprisingly strong sales and releasing an optimistic outlook. The stock of the world’s largest retailer rose $5.77 to $68.91.
BUCKING THE TREND: Urban Outfitters jumped $2.18, or 12 percent, to $27.77 after reporting first-quarter sales that exceeded analyst forecasts. The solid results from Urban and Wal-Mart contrasts with dour reports from many other retailers in recent weeks.
MAKE A DEAL: Monsanto rose $4.42, or 4.5 percent, to $101.55 after German drug and chemicals company Bayer confirmed it has entered talks with the U.S.-based seed company.
EUROPE’S DAY: Germany’s DAX fell 1.3 percent while the CAC-40 in France fell 0.7 percent. Britain’s FTSE 100 index was down 1.5 percent.
ASIA’S DAY: The Nikkei 225 index in Tokyo ended flat, while South Korea’s Kospi lost 0.5 percent. Hong Kong’s Hang Seng shed 0.7 percent. Australia’s S&P/ASX fell 0.6 percent. Benchmarks in Taiwan, New Zealand and Southeast Asia also lost ground.
ENERGY: Benchmark U.S. crude oil fell $1.24 to $46.92 a barrel in New York. Brent crude, used to price international oils, dropped $1.39 to $47.55 a barrel in London.
BONDS, CURRENCIES: U.S. government bond prices rose. The yield on the 10-year Treasury note fell to 1.84 percent from 1.86 percent. In currency trading, the dollar fell to 109.84 yen from 110 yen and the euro fell to $1.1202 from $1.1229.
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