U.S. stocks dip as market preps for stimulus tapering; Dow falls 0.46%

U.S. stocks fell on Friday in a quiet session as investors sold on sentiments that monetary stimulus programs such as the Fed's USD85 billion bond-buying program are on their way out beginning in a couple of months.

At the close of U.S. trading, the Dow Jones Industrial Average finished down 0.46%, the S&P 500 index fell 0.36%, while the Nasdaq Composite index fell 0.25%.

Investors sold or avoided stocks on market sentiments that Federal Reserve monetary stimulus programs that bolster stock prices by keeping borrowing costs low will begin to taper in September or December — either way in the near future.

Cleveland Fed President Sandra Pianalto said Wednesday there has been “meaningful improvement” in the labor market and that tapering may be warranted if it continues to strengthen.

Chicago Fed President Charles Evans and Dallas Fed President Richard Fisher have made similar comments.

Fed officials have said they will pay close attention to data before deciding on when to taper and eventually end stimulus programs, though investors took up positions on Friday that tapering will begin this year.

A decision to dismantle stimulus measures could send stocks falling even if temporarily due to the beginning of the end of Federal Reserve support. 

Leading Dow Jones Industrial Average performers included Alcoa, up 3.92%, Caterpillar, up 0.61%, and Pfizer, up 0.27%.

The Dow Jones Industrial Average's worst performers included Walt Disney, down 1.55%, AT&T, down 1.39%, and Home Depot, down 1.36%.

European indices, meanwhile, finished higher.

After the close of European trade, the EURO STOXX 50 rose 0.23%, France's CAC 40 rose 0.30%, while Germany's DAX 30 finished up 0.24%. Meanwhile, in the U.K. the FTSE 100 finished up 0.82%.