Investing.com - U.S. stocks fell on Wednesday after the Federal
Reserve said in the minutes of its January policy meeting released
earlier that it will likely continue dismantling its monthly
bond-buying program this year.
Stimulus tools such as the Fed's $65 billion in monthly bond
purchases boost stocks by suppressing long-term borrowing costs,
and talk of their tapering can water down equities by fueling
uncertainty as to how Wall Street will perform without a monetary
At the close of U.S. trading, the Dow Jones Industrial Average
fell 0.56%, the S&P 500 index fell 0.65%, while the Nasdaq
Composite index fell 0.82%.
At its Jan. 28-29 policy meeting, the Fed voted to trim its
monthly asset purchasing program to $65 billion from $75 billion
and stressed benchmark interest rates will stay at 0.00-0.25% until
the unemployment rates approaches 6.5% or even dips below that
mark, depending on the health of the economy in the context of
The minutes released on Wednesday, however, revealed that
monetary authorities debated ditching plans to hike rates if the
unemployment rate falls past 6.5%, a policy tool known as forward
"Participants agreed that, with the unemployment rate
approaching 6-1/2 percent, it would soon be appropriate for the
Committee to change its forward guidance in order to provide
information about its decisions regarding the federal funds rate
after that threshold was crossed," the minutes reported.
The unemployment rate currently stands at 6.6% though many still
have left the labor force due to fruitless job searches, which
artificially lowers the percentage headline unemployment rate.
Those out of work but not actively seeking jobs are not counted
as part of the labor force.
Elsewhere, Fed officials were willing to overlook January's soft
jobs report and other economic indicators taking into account a
string of powerful winter storms may have disrupted commerce.
While some hawkish member felt the time to hike interest rates
will come soon, consensus pointed to keeping rates on hold while
dismantling monthly bond purchases, which sparked selling in U.S.
"All members agreed that the cumulative improvement in labor
market conditions and the likelihood of continuing improvement
indicated that it would be appropriate to make a further measured
reduction in the pace of its asset purchases at this meeting," the
"Members again judged that, if the economy continued to develop
as anticipated, further reductions would be undertaken in measured
Elsewhere on Wednesday, the Commerce Department reported that
U.S. housing starts fell 16% in January to 880,000 units, outpacing
expectations for a 5.7% drop, though a series of winter storms may
have weakened the indicator and not a downtick in demand.
The number of building permits issued last month declined by
5.4% to a seasonally adjusted 937,000 units, outpacing expectations
for a 1.8% decline.
A separate report revealed that the U.S. producer price index
rose 0.2% last month, beating forecasts for a 0.1% gain, while core
producer prices were also up 0.2%.
Violence in the Ukraine as well as news that the Department of
Homeland Security has informed airlines to be on the lookout for
new shoe-bomb type of threat fueled the selloff as well.
Leading Dow Jones Industrial Average performers included
Verizon, up 1.22%, Chevron, up 0.80%, and United Technologies, up
The Dow Jones Industrial Average's worst performers included
JPMorgan, down 2.09%, Boeing, down 1.73%, and Home Depot, down
European indices, meanwhile, finished l higher.
After the close of European trade, the EURO STOXX 50 rose 0.07%,
France's CAC 40 rose 0.24%, while Germany's DAX 30 rose 0.07%.
Meanwhile, in the U.K. the FTSE 100 rose 0.01%.
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