Eight of ten sectors end in the red led by financials
U.S. stocks closed lower on Wednesday, 19 February 2014 after the minutes from the Federal Reserve's policy setting meeting revealed little consensus about when short-term rates would begin to rise. A larger-than-expected drop in home construction in January also weighed on sentiment.
Stocks began the day with slim losses, but the Dow and S&P 500 were quick to erase the early weakness. For its part, the Nasdaq was unable to make a sustained move into the green. Shortly before midday, equities slumped to lows in a move that coincided with a headline from the International Monetary Fund reminding investors that global growth remains uneven and fragile with persistent downside risks.
The Dow Jones Industrial Average had a volatile session, at one point adding as much as 95 points. But the blue-chip index ended the session 89.84 points, or 0.6%, lower at 16,040.56. The Nasdaq Composite snapped its eight-day winning streak, dropping 34.83 points, or 0.8%, to 4,237.95. The S&P 500 index broke a three-day winning streak, closing 12.01 points, or 0.7%, lower at 1,828.75.
Eight of ten sectors ended in the red with financials registering the largest decline.
Citigroup was the weakest performer among the majors while regional banks also endured significant losses.
Wednesday afternoon's release of the minutes of the latest meeting of the Federal Reserve's Open Market Committee (FOMC) revealed no major surprises. Two Federal Reserve officials on Wednesday said it would take a significant change in FOMC member attitudes to pull the tapering of the monthly bond-buying program off the tableeven with some recent weaker U.S. economic data released.
In other news Wednesday, the International Monetary Fund (IMF) released a report that said the Fund is worried about the emerging markets, given the recent turmoil with some emerging market currencies. The IMF warned about inflation in the emerging market countries and warned about deflation in the European Unioncalling the potential EU deflation a new risk to the global economy.
Today's economic data at Wall Street included two reports. Housing starts fell 16% in January, from an upwardly revised 1.048 million (from 999,000) in December to 880,000. The consensus expected housing starts to fall to 963,000. There are some questions about how much of a role the adverse weather played in the decline.
Separate report showed that January PPI increased 0.2% after ticking up 0.1% in December. The consensus expected the PPI to increase 0.2%. Prices of final demand goods increased 0.4% in January after increasing by the same amount in December. Energy price growth softened, up 0.3% in January after increasing 1.5% in December. Much of the gain in the final demand goods index was due to a 2.7% increase in pharmaceutical preparations.
In the M&A area, shares of Zale soared 40% to $20.92 after Signet Jewelers said it would buy its smaller rival for about $690 million in an all-cash deal. Signet shares jumped 18%.
Garmin climbed 9.6% after the company's earnings beat Wall Street expectations. The provider of standalone global positioning systems said its nonautomotive and mobile segments of its business made up 50% of the company's total revenue.
Bullion prices ended lower on Wednesday, 19 February 2014. Gold futures settled lower on Wednesday and lost even more ground after minutes from the Federal Reserve's January meeting showed that central-bank officials couldn't agree on the outlook for short-term interest rates and some questioned continuing the pace of reductions to asset purchases.
Gold for April delivery fell $4, or 0.3%, to settle at $1,320.40 an ounce on the Comex division of the New York Mercantile Exchange, before the Fed minutes were released. Also on Comex, March silver fell nearly 5 cents, or 0.2%, to settle at $21.85 an ounce.
Crude prices rose at Nymex, 19 February 2014 as the latest U.S. weather forecasts called for more severe cold, fueling worries about already tight supplies. Oil futures topped $103 a barrel to reach a four-month high, also finding support from the cold weather, which buoyed expectations of demand for oil products. March crude oil climbed 88 cents, or 0.9%, to end at $103.31 a barrel on Nymex, after trading as high as $103.80.
The EIA will come out with the weekly inventory report on crude and crude stockpiles tomorrow, 20 February 2014, a day later than scheduled due to last Monday's President Day holiday. Market expects the reports to show that crude-oil stockpiles rose 1.9 million barrels, but they also forecast a decline of 1.3 million barrels for gasoline inventories and a fall of 2 million barrels for distillates, which include heating oil.
Tomorrow, weekly initial claims and January CPI will be reported at 8:30 ET while January Leading Indicators and the Philadelphia Fed survey for February will both be released at 10:00 ET.
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