By Anora Mahmudova, MarketWatch
NEW YORK (MarketWatch) -- U.S. stocks closed mostly lower on
Wednesday after minutes from the last Federal Open Market Committee
meeting showed that a majority of officials judged the effects of
the monthly asset purchases to be diminishing over time.
Investors also pondered the implications of an upbeat
private-sector jobs report that was released on Wednesday morning.
The S&P 500 (SPX) closed down less than a point to 1,837.49. On
Tuesday, the benchmark index recorded its first gain this year,
snapping a three-day skid.
The Dow Jones Industrial Average (DJI) fell 68.20 points, or
0.4%, on Wednesday to 16,462.74, while the Nasdaq Composite (RIXF)
rose 12.43 points, or 0.3%, to 4,165.61.
Federal Reserve officials agreed in December to scale back their
asset-purchase program as most believed that the benefits of the
controversial policy were eroding as time passed, 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.
"What surprised us and other investors the most was the fact
that the main reason behind the taper decision was not so much the
improving economy, but what they saw as diminishing effects of the
asset purchases," said Chris Gaffney, senior market strategist at
EverBank.
"The reaction was largely muted because markets have shifted
their focus from tapering of the monetary stimulus back to the
economy and earnings," Gaffney said.
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.
Shares of Micron Technology Inc. (MU) surged nearly 10% after
the chip maker reported results late Tuesday that beat Wall Street
expectations.
Forest Laboratories Inc. (FRX) rallied 18% after announcing that
it would acquire Aptalis, a specialty pharmaceutical company, for
$2.9 billion in cash.
Constellation Brands Inc. (STZ) shares climbed 9.6% after the
beverage company beat its third-quarter earnings target and raised
its full-year profit outlook.
Apollo Education Group Inc. (APOL) shot up 14.2% after the
for-profit education company's quarterly earnings beat analyst
estimates.
Shares of Container Store Group Inc. (TCS) dropped nearly 15%
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 3.5% after 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
10%.
The dollar rose, while gold (GCH4) and oil prices (CLG4)
declined.
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