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Wall Street: Stocks retreat as end of year closes in

U.S. stocks fell on Wednesday, paring December’s gains on the last trading day of a year that capped the biggest bull market since the 1990s.

The Standard & Poor’s 500 Index fell 0.5 percent to 2,069.07 at 2:22 p.m. in New York, erasing an earlier advance and paring its monthly increase to less than 0.1 percent. The Dow Jones Industrial Average lost 79.54 points, or 0.4 percent, to 17,903.53. Trading in S&P 500 companies was 40 percent below the 30-day average for this time of the day. U.S. equity markets will be shut Thursday for the New Year’s Day holiday.

“You can have volatility in trading activity the last few days of the year, certainly on the last day, when people realize it’s their final opportunity to do whatever they want in terms of rearranging their portfolios,” John Carey, a Boston-based fund manager at Pioneer Investment Management, which oversees about $230 billion, said in a phone interview. “It’ll be off to the races again on Friday.”

The S&P 500 closed at a record on Dec. 29 for the 53rd time this year as $1.1 trillion was added to American share values. The benchmark overcame five separate declines of 4 percent or more in 2014, while stocks have never once declined more than three straight times, a first in data compiled by Bloomberg going back to 2000.

The index continued to climb this month, extending its annual advance to 12 percent, as the Federal Reserve pledged to be patient on the timing of interest-rate increases and the world’s largest economy expanded at the fastest pace in more than a decade.

Data showed more Americans filed applications for unemployment benefits for the first time in five weeks, displaying the typical year-end holiday swings that make the data difficult to interpret. A separate report showed contracts to purchase previously owned homes rose in November as employment gains and low borrowing costs helped bring potential buyers into the market.

“Equity indexes in the U.S. are near all-time highs, having outperformed many other developed markets, and various sentiment surveys are showing record-high optimism,” Benedict Goette, founder of asset-management firm Compass Capital AG in Zurich, wrote in an e-mail. “This makes markets highly vulnerable to a shift in risk perception.”

U.S. stocks will extend their bull market into a seventh year, according to Laszlo Birinyi, whose favorable stock calls since 2009 have mostly come true.

The S&P 500 is in a “protracted, durable bull market,” the president and founder of money-management and research firm Birinyi Associates Inc. said. The former Salomon Brothers Inc. equity analyst predicted in February that the benchmark gauge would reach 1,900 in the second quarter and said in July it would reach 2,100 by year end.

The Dow is heading for its sixth annual rally, after surpassing 18,000 for the first time last week. The Russell 2000 Index touched a record Wednesday before erasing gains, while the Nasdaq Composite Index reached the highest level since 2000 on Dec. 29.

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