By Kate Gibson, MarketWatch
NEW YORK (MarketWatch) -- U.S. stocks fell sharply on Wednesday,
retreating from multiyear highs, after minutes from the Federal
Reserve's last meeting illustrated differing views over continued
stimulus.
"If the Fed is talking about ending its asset-purchase program,
it's because they view the economic landscape as better," said Dan
Greenhaus, chief global strategist at BTIG LLC.
But some correction from an extended rally that has the S&P
500 index (SPX) up 6% so far this year "is hardly the worst idea,
especially in front of the coming sequester and budget debate," he
added.
The Dow Jones Industrial Average (DJI) shed 108.13 points, or
0.8%, to 13,927.54, with Caterpillar Inc. (CAT) shares among those
hit as the manufacturer of construction and mining equipment
reported global sales fell in the first quarter.
Retreating from highs last reached in October 2007, the S&P
500 index (SPX) shed 18.99 points, or 1.2%, to 1,511.95, with
materials the heaviest weight among its 10 sectors.
The market's rise has come along with the Fed's easing policy,
better-than-anticipated earnings and a short-term U.S. fiscal deal
reached in early January.
Minutes from the Federal Open Market Committee's January meeting
released Wednesday had some Fed members expressing concern about
the $85 billion a month in asset purchases.
"As we found out last month, we don't have a uniform voice
coming from the Fed," said Art Hogan, market strategist at Lazard
Capital Markets.
Interest rates could remain exceptionally low "well into 2014,
but how much we spend on purchases could be scaled back at any
time," said Hogan of the Fed's monthly spending on assets.
However, potential changes to the Fed's monetary policy are
"less bothersome than some things on the horizon," said Hogan,
listing the March 1 deadline for massive cuts in government
spending, known as sequestration, and the outcome of upcoming
Italian elections.
After closing at a 12-year high Tuesday, the Nasdaq Composite
(RIXF) on Wednesday slipped 49.19 points, or 1.5%, to 3,164.41.
Gold prices fell 1.6% to end below $1,600 an ounce, pressured by
the FOMC minutes and strength in the dollar.
Among individual stock moves, Boeing Co. (BA) rose 0.2% a day
after engineers approved the plane maker's contract offer,
deflating a labor dispute.
Apple Inc. (AAPL) fell 2.4% after supplier Foxconn Technology
Group froze hiring at its biggest factory in Shenzhen.
Toll Brothers Inc. (TOL) shed 9.1% after the luxury-home builder
reported earnings beneath expectations.
"Weakness in gold and Apple has been the norm of late, but when
you throw in the home builders and a couple of suppliers into the
mix, you get a broad decline," said Elliot Spar, market strategist
at Stifel Nicolaus & Company Inc.
For every stock on the rise more than three fell on the New York
Stock Exchange, where 816 million shares traded.
Composite volume topped 4.2 billion.
Figures from the Commerce Department had builders breaking
ground in January on the most homes in more than four years and
permits for construction ahead climbing. Housing starts fell to a
890,000 rate, below expectations.
The rise in permits suggests "the January decline in starts will
be temporary, and as the year progresses, housing starts will
continue to push higher," said Dan Greenhaus, chief global
strategist at BTIG LLC.
A separate report from the Labor Department had the
producer-price index rising 0.2% in January after a 0.3% decline
the month before.
Office Depot Inc. (ODP) and OfficeMax Inc. (OMX)(OMX) will join
in a $1.2 billion all-stock deal, the companies said Wednesday,
confirming an accord mistakenly announced ahead of its
completion.
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