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June 28, 2013

US stocks fall in quiet end to a bumpy month

(Continued)

NEW YORK —

Investors dumped stocks, but then had second thoughts this week as other Fed officials stressed that the central bank wouldn't pull back on its support soon. The Dow gained 365 points Tuesday-Thursday. For the month, the Dow moved up or down at least 100 points 16 of 20 trading days, the most since September 2011.

Bonds have also been on a bumpy ride in recent weeks, mostly down.

The prospect of fewer purchases by the Fed sent investors fleeing from all sorts of bonds — municipals, U.S. Treasury securities, corporate bonds, foreign government debt and high-yield bonds. Investors pulled a record $23 billion from bond mutual funds in the five trading days ended Wednesday, according to Bank of America Merrill Lynch.

Bond yields, which move in the opposite direction of bond prices, have rocketed.

The yield on the 10-year Treasury note rose to 2.49 percent from 2.47 percent late Thursday. Last month, the yield was as low as 1.63 percent. Treasury yields help set borrowing costs for a large range of consumer and business loans.

It was a rocky month in foreign markets, too. Major indexes in France, Germany and Britain lost about 5 percent in June.

In U.S. economic news Friday, the University of Michigan said its index of consumer sentiment dipped to 84.1 in June from 84.5 the previous month. But that was still relatively high. May's reading was the highest since July 2007.

Meanwhile, the Chicago Business Barometer sank to 51.6 from a 14-month high of 58.7 in May. That was well below the level of 55 that economists polled by FactSet were expecting.

Bill Strazzullo, chief strategist of Bell Curve Trading, is worried stock investors will sell on any signs the Fed is slowing its economic stimulus program.

"This rally is still very much being supported by monetary easing by central banks," he said. He added, referring to Friday's quiet trading: "It's the calm before the storm."

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