United States stocks fell for a third day on Friday, putting indexes on track for their first negative week since mid-April, on lingering concern the Federal Reserve may scale back its support to the economy.

In afternoon trading, the Standard Poor’s 500 Index dropped 0.4 percent, the Dow Jones industrial average fell 0.2 percent, and the Nasdaq Composite Index was 0.3 percent lower.

The three major indexes were on track to post their first negative week in five.

Global markets looked vulnerable to further falls on Friday, with better economic news from Europe doing little to encourage investors who are worried that central bank stimulus may curtailed.

MSCI’s world equity index, which shed 1.4 percent for its second biggest daily loss of the year on Thursday, was virtually unchanged, with losses in Europe canceling out a rise of nearly 1 percent in Japan’s turbulent Nikkei.

Trading has been choppy in the second half of the week as market participants assess the Federal Reserve’s evolving stance toward markets. The Fed’s stimulus measures have been instrumental in a rally that has driven stocks to record highs this year.

“We’ve had some volatility this week that we really haven’t experienced in a month or so, so it’s got a little bit of uncertainty here,” said Joe Bell, a senior equity analyst at Schaeffer’s Investment Research in Cincinnati.

Friday may also be a natural time for investors to take profits heading into the long weekend, with markets closed on Monday for the Memorial Day holiday, Mr. Bell said.

Even as there is some fear that the Fed will exit too soon, many analysts say the eventual tapering of the central bank’s stimulus will come with an expansion of the economy and corporate earnings, which will continue to support equities.

“A lot of people have only been giving the Fed credit for this rally and not been talking about some of the improvement in the labor market or housing data,” Mr. Bell said. “The economy in general has been on a lot better footing than perhaps people have given it credit for.”

Procter Gamble shares rose 4 percent after the company, the world’s largest household products maker, brought back A.G. Lafley as chief executive Thursday, replacing Bob McDonald, in the midst of a major restructuring.

Abercrombie Fitch was the S.P. 500’s biggest loser in the morning after the teen clothing retailer cut its profit forecast and said quarterly comparable sales fell 15 percent, which it blamed in part on inventory shortages. Its stock lost 10.2 percent.

Shares of Sears Holdings tumbled 14 percent after the company reported a bigger-than-expected quarterly loss on Thursday. Sears said cooler spring weather hurt its results.

Over all, the Wall Street’s pullbacks have been short and shallow since November as traders have taken any weakness as an opportunity to increase long positions.

Since Wednesday, the markets have been focused on the possibility that the Fed’s $85 billion per month in bond purchases will be scaled back later this year, in the wake of recent congressional testimony by the Fed chairman, Ben S. Bernanke, and the minutes from the Federal Open Market Committee’s latest meeting.

The minutes showed a degree of fracture among the committee’s members “in terms of the approach moving forward, specifically the time frame” of the unwinding of the Fed’s stimulus efforts, said Peter Kenny, chief market strategist at Knight Capital in Jersey City.

The Wall Street losses came despite a Commerce Department report that said durable goods orders rose 3.3 percent last month, exceeding expectations for an increase of 1.5 percent. Previous readings for orders were revised to show a smaller decline in March than previously estimated.

Thursday’s sell-off was concentrated in Japan’s stock market which suffered its biggest one-day percentage drop in two years, but also rattled European and American markets and sent the yen to near two-week highs against the dollar.

Japanese shares have gained nearly 70 percent in the last six months on the back of Japanese Prime Minister Shinzo Abe’s prescription of aggressive monetary and fiscal stimulus.

“The fact the market has had such a huge run over a relatively short period has left it incredibly vulnerable,” said Shane Oliver, strategist at AMP Capital.

Europe’s broad FTSE Eurofirst 300 index fell again, declining 0.2 percent after posting its biggest one-day fall in nearly 12 months on Thursday.

Although a key business survey showed sentiment in Germany was better than expected, this reduced expectations the European Central Bank would cut rates.

The Ifo survey found optimism over the economic outlook in Europe’s largest economy may be improving. A view reinforced by earlier data on German consumers.

The euro rose to hit a day’s high of $1.2959 after the German survey data, while German Bund futures cut some of the gains they had seen from the sell-off in equity markets.

Article source: http://www.nytimes.com/2013/05/25/business/daily-stock-market-activity.html?partner=rss&emc=rss