Stocks Decline for Week on Concerns Fed Will Curb Stimulus

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NEW YORK ( TheStreet) -- U.S. stocks posted their first weekly decline in five weeks on concern the Federal Reserve may wind down its stimulus program, while data showed weakness in China's manufacturing base, adding to doubts about the pace of the global economic recovery.

The S&P 500 finished down 0.05% to 1,649.61, off 1.07% for the week and posting its first three-day losing streak of the year. The weekly decline was the first since the week ended April 19.

TheDow Jones Industrial Average managed to squeeze into positive territory, settled up 0.06% to 15,303.10 and inching down 0.33% for the week while the Nasdaq closed down 0.01% to 3,459.14, off 1.14% for the week.

Manufacturing data in China indicated an unexpected contraction in manufacturing activity in the country, culminating into the steepest decline for the Nikkei 225 in Japan since the aftermath of the tsunami and nuclear disaster in March 2011.

Ryan Detrick, Cincinnati-based senior technical strategist with Schaeffer's Investment research said that while the nearer-term picture has become more negative, a pullback of 19% to 21% as in 2010 and 2011, isn't likely. Rather, a pullback in the realm of 10%, like that seen last year, would actually be normal and healthy.

"Bigger picture, the bull market is still alive and well," Detrick said.

The downward momentum in global equity markets began Wednesday after Federal Reserve Chairman Ben Bernanke indicated the central bank may be ready to curb its bond buying if economic conditions improve. Bernanke said the Fed would move slowly, and only on the condition that there was strong evidence of an economic improvement. But traders have chosen to sell anyway especially after the speedy run-up of the S&P 500 to record levels.

"Some traders did not wait to book profits in long equity positions," Mike Zarembski and Rob Kurzatkowski, senior analysts OptionsXpress Holdings in Chicago, wrote in a note.

A winner of the day was Procter & Gamble , which settled up 4.04% to $81.88 as Wall Street welcomed the consumer products giant's announcement that it's bringing back A.G. Lafley as CEO of the consumer products giant in an effort to boost slow sales growth. Lafley will replace CEO Bob McDonald, effective immediately. McDonald, who will retire June 30 after a transition period, has been CEO since 2009. Lafley, who served as CEO of the company from 2000 to 2009, also was named chairman and president.

Abercrombie & Fitch was a big decliner in the S&P, losing 8% to $50.02 after the apparel retailer reported a quarterly loss that was 4 cents wider than expectations, as sales disappointed. The company posted a quarterly loss of 9 cents a share as same-store sales declined by 15%; guidance for the full year also was worse than expected.