Fed officials considering end of asset purchases as US economy shows signs of slowing

US stocks fell on Thursday. The S&P 500 fell 0.5 percent after four consecutive days of gains that saw the index reach new all-time highs.

The yield on ten-year Treasuries fell six basis points to 1.88 percent. Oil rose 0.9 percent but gold fell 0.7 percent.

Investors sold stocks on Thursday after several Federal Reserve officials recently voiced concerns over the Fed's asset purchases and raised the possibility of an end to these purchases. From Bloomberg:

Dallas Fed President Richard Fisher said today buying mortgage bonds risks disrupting the market, while Philadelphia Fed President Charles Plosser said, “it’s not good for the bank to be holding lots of mortgage paper.” Jeffrey Lacker of Richmond said to reporters yesterday the Fed should “get out of the credit allocation business.”

“It’s clear that the labor market has improved since September” when the Fed began its third round of asset purchases, [San Francisco Fed President John Williams] said today in the text of a speech in Portland, Oregon. “We could reduce somewhat the pace of our securities purchases, perhaps as early as this summer” and end the program late this year.

Weak US economic data on Thursday also did not help markets.

Housing starts plunged 16.5 percent in April. The report was softened though by a 14.3 percent rise in building permits.

Adding to signs of slowing growth in the US economy, other reports on Thursday showed that initial claims for state unemployment benefits jumped by 32,000 last week to 360,000, the biggest increase since November, and the Federal Reserve Bank of Philadelphia’s general economic index fell to -5.2 from 1.3 the prior month.

Inflation is also fading, with consumer prices falling in April for the second consecutive month. The consumer price index fell 0.4 percent last month, the biggest decrease since December 2008, after falling 0.2 percent in March.