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US stocks fell on Wednesday with the S&P 500 posting its biggest decline in three weeks, after minutes from the latest US Federal Reserve meeting showed some officials were open to tapering large-scale asset purchases as early as at the June meeting.
Trading was volatile - the Dow and the S&P indexes both rose more than 1% during the morning, but fell more than 1% in the afternoon.
The minutes followed comments from Chairman Ben Bernanke, who said the Fed could decide to scale back the pace of bond purchases at one of the "next few meetings" if the economic recovery looked set to maintain forward momentum.
The comments were a blow to a market that had accelerated after Bernanke said the central bank needed to see further signs of traction in the economy before it tapered stimulus.
"This is a very sensitive market and particularly sensitive to any notion that tapering will come too soon," said Quincy Krosby, market strategist at Prudential Financial in New York.
"No one wants to be selling if the data reaches the point when the Fed begins to specifically talk about tapering. The market doesn't wait for the Fed to move. It will move before. That's how it operates."
Krosby also added that Bernanke went off-script and in his effort to be transparent, "he confused the market."
According to the minutes of the April 30-May 1 policy meeting released on Wednesday, "a number" of officials were open to tapering large-scale asset purchases as early as the June meeting, but disagreement continued on what conditions would suffice to begin that move.
One official preferred to begin decreasing purchases immediately and another wanted to add more accommodation immediately, but ultimately most felt it was important simply to be prepared to adjust the pace up or down in response to incoming data.
Investors have increasingly turned their attention to when the Fed's current $85 billion-per-month bond purchase program might end or slow. The stimulus has been a major force behind a rally in US equities that has helped the S&P 500 and Dow industrials gain about 16-17% so far this year.
The Dow Jones industrial average was down 80.41 points, or 0.52%, at 15,307.17. The Standard & Poor's 500 Index was down 13.81 points, or 0.83%, at 1,655.35. The Nasdaq Composite Index was down 38.82 points, or 1.11%, at 3,463.30.
The S&P 500 rose as high as 1,687.18 and fell as low as 1,648.86 during Wednesday's trading session while the Dow rose as high as 15,542.40 and fell as low as 15,265.96.
"You have more volatility than you've had for a long time," said Uri Landesman, president, Platinum Partners in New York.
"The technician in me looks at a rocket shot straight up and says you could get a pretty good correction here without that much work. There aren't really solid levels of support on the way down because we broke through all of them so quickly."
All 10 sectors on the S&P 500 closed negative, with energy and utilities leading the decline. The energy sector index fell 1.2 % while the utilities sector fell 1.6%.
After the market close, shares of Hewlett-Packard Co jumped 10 % after the world's largest personal computer maker raised the lower end of its full-year outlook. The stock had closed up 0.6% at $21.23.
Bristol-Myers Squibb shares rose 5.3% at $46.40 after a Citi note highlighted excitement surrounding so-called immunotherapy, in the wake of positive results from clinical trials conducted by companies such as Bristol-Myers and Roche Holding .
Target Corp cited unseasonably cold weather as it reported a 0.6% decline in first-quarter sales at US stores open at least a year. Target cut its full-year profit forecast and shares slid 4% to $68.40.
Toll Brothers shares rose 2.9% to $37.07 after the largest US luxury homebuilder posted a 46% rise in quarterly profit, suggesting the housing recovery is picking up pace across the industry.
Volume was roughly 8.34 billion shares on the New York Stock Exchange, the Nasdaq and the NYSE MKT, exceeding the year-to-date average daily closing volume of about 6.4 billion.
Decliners outnumbered advancers on the NYSE by 2,362 to 648, while on the Nasdaq, decliners beat advancers 1,870 to 632.
