Stocks closed down on Wall Street Wednesday as details of the Fed's?January meeting seemed to catch stock investors by surprise.
Specialist Anthony Confusione, right, works at his post on the floor of the New York Stock Exchange. Stocks surged at the start of the year then drifted slightly higher in recent weeks with few major events to drive trading one way or another.
Richard Drew/AP/File
EnlargeMinutes from the Federal Reserve's last meeting spurred a late drop in the stock market Wednesday. Weaker worldwide sales from Caterpillar also helped pull the market lower.
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The Dow fell 100 points to 13,935 shortly before the closing bell. Caterpillar slid $2.50 to $93.10.
Details of the Fed's January meeting seemed to catch investors by surprise. Several Fed policymakers worried that the bank's bond-buying effort could eventually unsettle financial markets or cause the bank to take losses. Even so, most of the Fed officials thought the economy faced fewer risks than in December.
Judging by the market's reaction, the Fed appears to be closer to ending its support for the economy than traders had expected, said Dan Greenhaus, chief global strategist at the brokerage BTIG. "We're at a point now where we're discussing how we're going to end this, not whether it's going to end," he said.
News that Apple's major supplier, Foxconn, stopped hiring at its largest plant in China helped push down Apple's stock. Foxconn reportedly said the hiring freeze was not caused by slumping orders for iPhones. Apple fell $10.39 to $449.45.
The Standard & Poor's 500 index dropped 18 points to 1,512. The Nasdaq composite fell 46 points to 3,167.
The stock market surged at the start of the year then drifted slightly higher in recent weeks with few major events to drive trading one way or another. That could change as soon as Congress returns from vacation next Monday. Deep federal spending cuts are scheduled to start March 1 unless Congress and the White House find a way to avoid them.
Both the Dow and the S&P 500 have gained 6 percent for the year. The Nasdaq is up 5 percent.
Phil Orlando, the chief market strategist at Federated Investors, believes the stock market has climbed too quickly this year. He's looking for it to get knocked down by 3 percent or more in the coming weeks. Another budget battle in Washington could be the trigger.
"There are a lot of us who say, 'We're a little bit ahead of ourselves here,'" Orlando said. "I still expect an all-time high for the S&P 500 this year, but it's going to get there in fits and starts."
Even though housing construction slowed down in January, the Department of Commerce reported Wednesday that new housing starts remained strong. Builders started construction at an annual rate of 890,000 last month, down 8.5 percent from December. Applications for building permits increased.
The Dow closed at its highest level of the year Tuesday, bringing it within one percent of 14,164, the record high reached more than five years ago.
In the U.S. government bond market, the yield on the 10-year Treasury note slipped to 2.01 percent from 2.03 percent late Tuesday. The yield, used as a benchmark rate for mortgages and other loans, has climbed steadily higher since the start of the year, when it traded around 1.70 percent.
Among companies making moves:
? GPS device maker Garmin slumped 9 percent, the biggest drop in the S&P 500 index, after the company's results missed analysts' forecasts. Demand has waned for handheld navigation devices as more customers use maps on their smartphones. Garmin lost $3.77 to $35.47.
? Food giant ConAgra gained 18 cents to $33.63 after it raised its profit forecast for the year. The company, whose brands include Chef Boyardee, said its acquisition of Ralcorp will add a nickel per share to adjusted earnings this year.
Source: http://rss.csmonitor.com/~r/feeds/csm/~3/8qVQkcbI2z4/Stocks-fall-following-Federal-Reserve-minutes
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