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U.S. stocks fall on Fed minutes, debt ceiling concerns, Dow loses 0.16%

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Investing.com - U.S. stock prices dipped on Thursday after the Federal Reserve released the minutes of its December monetary policy meeting that revealed a lack of agreement as to when stimulus programs should wind down.

Concerns the U.S. government will soon hit its debt ceiling and require congressional intervention sent investors selling for profits as well.

At the close of U.S. trading, the Dow Jones Industrial Average finished down 0.16%, the S&P 500 index was down 0.21%, while the Nasdaq Composite index fell 0.38%.

The Federal Reserve released the minutes of its December monetary policy meeting earlier Thursday, revealing that U.S. central bankers may be forming different camps as to when a USD85 million monthly bond-buying program designed to stimulate the economy should expire.

"A few members expressed the view that ongoing asset purchases would likely be warranted until about the end of 2013, while a few others emphasized the need for considerable policy accommodation but did not state a specific time frame or total for purchases," the Fed minutes read.

"Several others thought that it would probably be appropriate to slow or to stop purchases well before the end of 2013, citing concerns about financial stability or the size of the balance sheet. One member viewed any additional purchases as unwarranted."

The bond-buying program, known technically as quantitative easing but dubbed by many as printing money out of thin air, weakens the U.S. dollar and pumps up stock prices by flooding the economy with liquidity to keep interest rates low, and talk of ending easing can spark risk-off trading strategies.

Stocks also fell on sentiments that even though Congress steered the country away from the fiscal cliff, lawmakers will soon meet again to debate raising the U.S. government's USD16.4 trillion debt ceiling likely sometime around February.

The Treasury can delay defaulting temporarily via taking extraordinary measures though lawmakers must eventually vote to lift it.

In 2011, Congress waited until the last minute to raise the debt ceiling, narrowly avoiding default.

Conflicting data out of the labor market also kept investors largely positioned in the greenback and out of equities, especially ahead of the December jobs report due for release in the U.S. on Friday.

Payroll processer ADP said earlier that non-farm private employment rose by a seasonally adjusted 215,000 jobs in December, beating market calls for an increase of 133,000.

November's figure was revised up to a gain of 148,000 from a previously reported increase of 118,000.

Separately, the U.S. Department of Labor reported that the number of individuals filing initial jobless claims during the week ending Dec. 29 rose by 10,000 to a seasonally adjusted 372,000, compared with expectations for a decline of 7,000 to 355,000, which dampened spirits.

Jobless claims for the preceding week were revised up to 362,000 from a previously reported 350,000.

Leading Dow Jones Industrial Average performers included Merck, up 2.39%, Caterpillar, up 0.96%, and Alcoa, up 0.89%.

The Dow Jones Industrial Average's worst performers included UnitedHealth Group, down 4.68%, DuPont, down 1.26%, and Microsoft, down 1.34%.

European indices, meanwhile, finished largely lower.

After the close of European trade, the EURO STOXX 50 fell 0.37%, France's CAC 40 fell 0.34%, while Germany's DAX 30 finished down 0.29%. Meanwhile, in the U.K. the FTSE 100 finished up 0.33%.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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