U.S. stocks dip on Fed comments; Dow falls 0.30%

U.S. stocks dip on Fed comments; Dow falls 0.30%

Investing.com – U.S. stocks finished mixed to lower on Monday after a key Federal Reserve official said investors should expect U.S. stimulus programs to stay in place forever.

Stimulus tools, such as the Fed's USD85 billion bond-buying program, tend to bolster stock prices by keeping interest rates low, and talk of their dismantling can send equities prices falling by fueling uncertainty over how markets will react to waning monetary support.

At the close of U.S. trading, the Dow Jones Industrial Average finished down 0.30%, the S&P 500 index fell 0.15%, while the Nasdaq Composite index rose 0.09%.

Despite spotty economic indicators hitting the wire in the U.S. in recent weeks, the Federal Reserve will soon scale back stimulus measures as part of its mission to ensure price stability as well as optimal conditions in the labor market.

Federal Reserve Bank of Dallas President Richard Fisher said earlier stimulus programs won't last forever.

"A corollary of reining in this massive monetary stimulus in a timely manner is that financial markets may have become too accustomed to what some have depicted as a Fed 'put.' Some have come to expect the Fed to keep the markets levitating indefinitely," Fisher said earlier, according to prepared remarks of his speech.�

"This distorts the pricing of financial assets, encourages lazy analysis and can set the groundwork for serious misallocation of capital."

Fisher's comments sent stocks inching lower despite better-than-expected data out of the U.S. service sector.

The Institute for Supply Management reported earlier that its non-manufacturing purchasing managers' index rose to 56.0 in July from a three-year low of 52.2 in June.�

Analysts had expected the index to inch up to 53.0 last month.�

An increase in new orders drove gains, with the new orders component of the index rising to 57.7 from 50.8 in June.�

A reading over 50 signifies expansion.�

Leading Dow Jones Industrial Average performers included UnitedHealth Group, up 1.51%, Alcoa, up 0.50%, and Cisco Systems, up 0.46%.

The Dow Jones Industrial Average's worst performers included Intel, down 1.25%, United Technologies, down 1.04%, and The Travelers Companies, down 0.98%.

European indices, meanwhile, finished mixed to lower.

After the close of European trade, the EURO STOXX 50 fell 0.06%, France's CAC 40 rose 0.11%, while Germany's DAX 30 finished down 0.10%. Meanwhile, in the U.K. the FTSE 100 finished down 0.43%.

On Tuesday, the U.S. will release data on its trade balance, while Federal Reserve Bank of Chicago President Charles Evans is due to speak in public.