Wall Street edges down after S&P 500 flirts with record

By Rodrigo Campos

NEW YORK (Reuters) - U.S. stocks edged lower on Wednesday with the S&P 500 facing technical resistance near its record high, while economic data continued to be blurred by extreme weather.

Minutes from the Federal Reserve's policy-setting committee's most recent meeting, which showed Fed officials were nearing a decision how to adjust a promise to keep interest rates low for a while to come, didn't give the market clear direction either.

Wednesday's data gave the latest evidence that an extremely cold winter was putting a big dent in the economy, but the equity market continued to mostly dismiss it.

U.S. housing starts recorded their biggest drop in almost three years in January. The seasonally-adjusted producer price index for final demand rose 0.2 percent, no real indication of a broad pick-up in inflation pressures.

 

However, some economists lowered their first-quarter growth estimates on the back of the weak starts data. Goldman Sachs lowered its first-quarter growth estimate by a tenth of a percentage point to a 1.8 percent annual rate. Barclays cut its forecast by 0.3 percentage point to a 1.9 percent rate.

"I do think we need some time to gain more insight into the visibility of economic improvement, and that's going to require another round of economic data," said Terry Sandven, chief equity strategist at U.S. Bank Wealth Management in Minneapolis.

He said he expects the market to trade "sideways with an upward bias," and the "fundamental backdrop remains favorable for equities."

The data was among a slew of recent economic reports affected by a severe U.S. winter, including a U.S. homebuilder confidence index on Tuesday, which suffered its largest ever one-month drop in February. The weather was also largely blamed for the sharp slowdown in hiring in December.

The Dow Jones industrial average fell 15.93 points or 0.1 percent, to 16,114.47, the S&P 500 lost 4.25 points or 0.23 percent, to 1,836.51 and the Nasdaq Composite dropped 21.071 points or 0.49 percent, to 4,251.712.

The S&P 500 set an all-time intraday high of 1,850.84 on January 15, and came within 4 points of that level at its session high on Wednesday. The Nasdaq was on track to halt an eight-day string of gains.

Earnings continue to trickle in, but not at a pace strong enough to dictate the market's direction.

With 83 percent of S&P 500 components having reported earnings, 65.9 percent have beaten earnings expectations, above the median since 1994 of 63 percent earnings beats. The average in the past four quarters is 67 percent.

Tesla shares fell 4.5 percent to $194.39, a day after they hit an all-time high of $206.00. The electric car maker reports earnings after the close.

Herbalife Ltd shares slid 4.5 percent to $65.86 a day after the nutritional-supplement company reported fourth-quarter earnings.

Chelsea Therapeutics soared 23 percent to $6.09 a day after its drug Northera, which treats a rare form of low blood pressure associated with neurological disorders such as Parkinson's disease, won approval from the U.S. Food and Drug Administration.

Kay Jewelers parent Signet Jewelers said it would buy smaller rival Zale Corp for $21 per share in cash, valuing the mid-tier jeweler at about $690 million. The offer represents a premium of about 41 percent to Zale's close of $14.91 on Tuesday.

Shares of Signet Jewelers gained 18.1 percent to $93.61. Zale jumped 40.2 percent to $20.90.

(Reporting by Rodrigo Campos; Editing by Nick Zieminski)