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VOL. 38 | NO. 46 | Friday, November 14, 2014

US stocks drift lower after release of Fed minutes

The Associated Press

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U.S. financial markets pulled back slightly from their most recent record highs Wednesday, ending lower for the first time this week.

The Dow Jones industrial average and Standard & Poor's 500 index mostly hovered slightly below the all-time high closes set a day earlier.

Investors sifted through a batch of favorable corporate earnings as they waited for the Federal Reserve to publish the minutes from its late-October policy meeting.

Traders hoped to glean fresh insight into when the central bank will raise a benchmark interest rate that affects many consumer and business loans.

In the end, the deeper look at the Fed's deliberation didn't sway trading meaningfully.

"This does not move the needle a whole bunch," said John Canally, Chief Economic Strategist for LPL Financial. "The minutes confirm that the Fed remains on track to hike rates about a year from now based on the economy tracking to their forecasts."

The slide in oil prices continued, despite pivoting upward at times during the day. U.S. government bond prices fell.

All told, the S&P 500 index slipped 3.08 points, or 0.2 percent, to 2,048.72.

The Dow fell 2.09 points, or 0.01 percent, to 17,685.73.

The Nasdaq composite shed 26.73 points, or 0.6 percent, to 4,675.71.

Seven of the 10 sectors in the S&P 500 declined, with telecommunications stocks dropping the most. Energy stocks managed the biggest gain.

Avon Products led the index's decliners, sliding 47 cents, or 4.7 percent, to $9.43.

Interest rates tend to increase when the economy is growing and adding jobs, trends that are good for corporate profits. When rates remain low, however, they tend to make stocks more attractive in comparison with bonds.

During its Oct. 28-29 policy meeting, the Fed reaffirmed that it expected to keep a key short-term interest rate low for a "considerable time."

The minutes released Wednesday showed that the Fed decided not to alter its wording on the timing of any interest rate increases. Fed officials worried that a change could be misinterpreted by financial markets.

Most economists predict that the Fed won't raise rates before June.

"The market's reaction is a reasonable one; no bombshells here," said Erik Davidson, deputy chief investment officer of Wells Fargo Private Bank. "The free short-term money that's out there will continue to be positive for the stock market."

Apart from the Fed action, investors had their eye on quarterly earnings from several retailers.

Lowe's reported better-than-expected third-quarter earnings, helped by a nascent recovery in the housing market. The home improvement retailer also raised its full-year forecast. The stock rose $3.73, or 6.4 percent, to $62.26.

Target also reported third-quarter earnings that exceeded Wall Street's expectations, rebounding from a massive data breach just before Christmas last year. Its shares gained $4.99, or 7.4 percent, to $72.50.

Investors also bid up shares in Staples, which reported higher fiscal third-quarter earnings late Wednesday. The office supply chain surged $1.16, or 9.1 percent, to $13.92.

The price of oil finished nearly unchanged as hopes for an OPEC production cut offset an Energy Department report showing that crude inventories increased far more than expected last week.

Benchmark U.S. crude fell 3 cents to close at $74.58 a barrel on the New York Mercantile Exchange. Brent crude, a benchmark for international oils used by many U.S. refineries, fell 37 cents to close at $78.10 on the ICE Futures exchange in London.

In other energy futures trading on the NYMEX:

— Wholesale gasoline rose 0.1 cent to close at $2.044 a gallon

— Heating oil fell 2.2 cents to close at $2.359 a gallon.

— Natural gas rose 12.7 cents to close at $4.371 per 1,000 cubic feet.

In metals trading, the price of gold fell $3.20 to $1,193.90 an ounce, silver rose 12 cents to $16.29 an ounce and copper rose four cents to $3.05 a pound.

The yield on the 10-year Treasury note rose to 2.35 percent from 2.32 percent late Tuesday.

Among the stocks making big moves Wednesday:

— Cliffs Natural Resources sank 20 percent on news that the mining company is seeking to exit its Eastern Canadian iron ore operations, including the Bloom Lake mine. The stock fell $2.04 to $8.17.

— Oplink Communications jumped 13.8 percent after the optical networking equipment company said it will be acquired by Koch Industries in an all-cash deal worth $445 million. Oplink shares rose $2.93 to $24.18.

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