By Anora Mahmudova, MarketWatch
NEW YORK (MarketWatch) -- The U.S. stock market had a largely
muted reaction on Wednesday to the minutes from the last Federal
Open Market Committee meeting, with stock indexes holding on to
earlier losses.
Investors also pondered the implications of an upbeat
private-sector jobs report that was released on Wednesday morning.
The S&P 500 (SPX) was down less than a point to 1,837.57. On
Tuesday, the benchmark index recorded its first gain this year,
snapping a three-day skid.
The Dow Jones Industrial Average (DJI) fell 69 points, or 0.4%,
on Wednesday to 16,460.65, while the Nasdaq Composite (RIXF) rose
13 points, or 0.3%, to 4,166.22.
Automatic Data Processing said on Wednesday that private
employers created 238,000 jobs in December, exceeding estimates.
Economists polled by MarketWatch expected a gain of 215,000 jobs.
Economists use ADP's data to get a sense of the U.S. Labor
Department's employment report, which will be released Friday and
covers government jobs in addition to the private sector.
Ian Shepherdson, chief economist at Pantheon Macroeconomics,
wrote that while "it is not a guarantee, the odds now favor a
consensus-beating report on Friday."
Better-than-expected jobs numbers strengthened the case for
further tapering of the Federal Reserve's bond-buying program,
which has boosted equities. Phil Orlando, chief equity strategist
at Federated Investors, said markets were wrong to sell off on good
news and will eventually correct themselves.
"The ADP numbers were excellent today, not only did they beat
consensus estimates by a wide margin, the November numbers were
also revised upwards," Orlando said.
"These numbers, as well as phenomenal numbers from the trade
deficit data, have prompted many analysts to upgrade their
estimates for the GDP," he added.
"Markets are coming to the realization that the reason behind
the Fed's decision to start tapering in January is because it
genuinely believes that the economy can continue to grow on its own
from here on and that the tapering will finish by the end of the
year," Orlando said.
Federal Reserve officials agreed in December to start to wind
down their asset-purchase program as most believed that the
benefits of the controversial policy were eroding over time,
according to minutes from their last meeting released Wednesday. By
a 9-to-1 vote, the Fed on Dec. 18 decided to trim its
asset-purchase program by $10 billion to $75 billion per month
starting in January.
Shares of Micron Technology Inc. (MU) surged 9% after the chip
maker reported results late Tuesday that beat Wall Street
expectations.
Forest Laboratories Inc. (FRX) rallied 16% after announcing that
it would acquire Aptalis, a specialty pharmaceutical company, for
$2.9 billion in cash.
Constellation Brands Inc. (STZ) shares climbed 8.3% after the
beverage company beat its third-quarter earnings target and raised
its full-year profit outlook.
Apollo Education Group Inc. (APOL) shot up 14% after the
for-profit education company's quarterly earnings beat analyst
estimates.
Shares of Container Store Group Inc. (TCS) dropped 14% after the
retailer said late Tuesday that it had swung to a third-quarter
loss. The firm went public in early November.
Twitter Inc. (TWTR) shares fell 1.8% after analysts at Cantor
Fitzgerald downgraded the social media company to sell from
hold.
J.C. Penney Co. (JCP) commented on its holiday sales Wednesday,
saying it is "pleased with its performance," but provided no
details in the report. Shares of the struggling retailer dropped
8%.
The dollar rose, while gold (GCH4) and oil prices (CLG4)
declined.
More from MarketWatch:
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Private-sector hiring is strongest in 13 months
What to look for in the Fed minutes.
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