Late decline occurred in reaction to the October FOMC minutes
U.S. stocks fell on Wednesday, 20 November 2013 after Federal Reserve meeting minutes signaled the central bank was on track to slow down its bond-buying program that has boosted the equity market. The major averages ended on their lows after early gains turned into afternoon losses. The late decline occurred in reaction to the October FOMC minutes, which mentioned the possibility of tapering in the 'coming months.'
The Dow Jones Industrial Average lost 66.21 points, or 0.4%, to close at 15,900.82, after briefly trading as many as 102 points lower. The Nasdaq Composite shed 10.28 points, or 0.3%, to end at 3,921.27. The S&P 500 fell 6.50 points, or 0.4%, to finish at 1,781.37.
The U.S. Federal Reserve's FOMC minutes, released Wednesday afternoon, showed several members of the committee said at their October meeting that they could see the Fed tapering its $85 billion-a-month bond-buying program at one of its next few meetings. The committee members also saw the U.S. economy growing at a moderate pace and talked about better articulating to the public its strategies and forward guidance.
The U.S. dollar index shot to its daily high on the news, which was also a bearish signal for commodity traders.
Among economic reports expected for the day, better-than-expected October retail sales report set the stage for an upbeat open at Wall Street. The report pointed to an increase of 0.4% while the consensus expected a more modest uptick of 0.1%. More importantly, the report indicated the government shutdown had essentially no effect on consumer spending.
Among remaining economic data, business inventories rose 0.6% in September after increasing 0.4% in August. The consensus expected inventory levels to increase 0.4%.
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Separately, existing home sales fell 3.2% to 5.12 million in October from an unrevised 5.29 million in September. The consensus expected home sales to fall to 5.20 million.
In other U.S. economic news, the Labor Department said the consumer price index dipped 0.1% in October, roughly matching what economists expected for that inflation gauge. Core prices increased 0.1%, below the 0.2% expected by the consensus. On an annualized basis, CPI came in at 1.0% while core CPI was reported at 1.7%.
Among major stocks under focus, J.C. Penney jumped 8.4% as the department-store chain said it expects comparable sales and gross margin to both improve from a year earlier. Deere & Co. rose 2.1% as the tractors maker posted quarterly profit that topped expectations. Lowe's fell 6.2% after the home-improvement retailer's quarterly earnings missed forecasts.
Bullion prices ended substantially lower on Wednesday, 20 November 2013 at Comex. Gold futures on Wednesday marked their lowest settlement since mid-July, pressured after the latest round of mixed U.S. economic data and by strength in the dollar, with prices falling even further in electronic trading after the release of minutes from the Federal Reserve's October meeting.
Ahead of the minutes, gold for December delivery dropped $15.50, or 1.1%, to settle at $1,258 an ounce on the Comex division of the New York Mercantile Exchange. December silver declined by 28 cents, or 1.4%, to $20.06 an ounce. That was the lowest close for a most-active contract since early august.
Crude Oil futures closed little changed on Wednesday, 20 November 2013 after prices were whipped around through the session by weekly U.S. government data on petroleum supplies, the December crude contract expiration and minutes from last month's Federal Reserve meeting.
Crude oil for December delivery lost a penny to settle at $93.33 a barrel on the New York Mercantile Exchange.
The U.S. Energy Information Administration reported that crude supplies rose 400,000 barrels for the week ended 15 November 2013. Market was looking for a decline of 500,000 barrels, thougmarket had forecast a 1.4 million-barrel increase. The increase in crude supplies marked the ninth weekly climb in a row for the EIA report. EIA data also showed that gasoline supplies fell by 300,000 barrels, compared with expectations for a fall of 150,000 barrels. Distillate stockpiles were the biggest surprise, dropping 4.8 million barrels. Market had looked for a decline of 1.3 million barrels.
Tomorrow, weekly initial claims and October PPI will be reported at 8:30 ET while the November Philadelphia Fed survey will be released at 10:00 ET.
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