Investing.com - U.S. stocks fell on Wednesday after the Federal Reserve said in the minutes of its October policy meeting released earlier that it may begin tapering the pace of its monthly asset purchases in the coming months.
Stimulus tools such as the Fed's USD85 billion in monthly bond purchases drive down interest rates to spur recovery, boosting stock prices in the process, and talk of their dismantling can dampen stock prices by fanning uncertainty as to how equities will perform without a monetary crutch.
At the close of U.S. trading, the Dow Jones Industrial Average finished down 0.41%, the S&P 500 index fell 0.36%, while the Nasdaq Composite index fell 0.26%.
The economy is on the mend and will soon require less support from the Fed in the form of monthly bond purchases, the Fed minutes found.
"During this general discussion of policy strategy and tactics, participants reviewed issues specific to the Committee's asset purchase program. They generally expected that the data would prove consistent with the Committee's outlook for ongoing improvement in labor market conditions and would thus warrant trimming the pace of purchases in coming months," the minutes read.
The minutes sent share prices falling, while data released earlier also painted a picture of an economy in less need of Fed support.
The U.S. Commerce Department reported that retail sales expanded 0.4% in October, blowing past expectations for a 0.1% gain after coming in flat the month earlier.
Elsewhere, the Commerce Department reported that wholesale business inventories inched up by 0.6% in September compared to expectations for a 0.3% gain.
The National Association of Realtors reported earlier that existing home sales declined 3.2% to a seasonally adjusted 5.12 million units in October from 5.29 million in September.
Analysts had expected U.S. existing home sales to fall 2.6% to 5.13 million units last month, though investors shrugged off the report on sentiments October is not a strong month for housing anyway.
Consumer price inflation figures largely met expectations.
U.S. Department of Labor said the country's consumer price index fell by a seasonally adjusted 0.1% in October, defying expectations for a 0.1% increase after rising by 0.2% in September.
Year-over-year, the U.S. consumer price index rose at an annualized rate of 1.0% last month, in line with estimates and slowing from 1.2% in September.
The core consumer price index, which is stripped of volatile food and energy costs, inched up 0.1% in October, in line with forecasts. Core consumer prices rose 0.1% in September.
The U.S. core CPI increased at annualized rate of 1.7% last month, unchanged from September and in line with expectations.
Still, stocks didn't plummet as investors concluded that any decision to taper asset purchases, most likely in early 2014, won't usher in an era of policy tightening.
Leading Dow Jones Industrial Average performers included Microsoft, up 0.93%, Pfizer, up 0.84%, and UnitedHealth, up 0.53%.
The Dow Jones Industrial Average's worst performers included Boeing, down 3.26%, Caterpillar, down 1.18%, and DuPont, down 1.11%.
European indices, meanwhile, finished largely lower.
After the close of European trade, the EURO STOXX 50 fell 0.06%, France's CAC 40 fell 0.09%, while Germany's DAX 30 rose 0.10%. Meanwhile, in the U.K. the FTSE 100 finished down 0.25%.
On Thursday, the U.S. is release data on producer price inflation, as well as the weekly report on initial jobless claims. The U.S. is also to release data manufacturing activity from the Philly Fed.
Stimulus tools such as the Fed's USD85 billion in monthly bond purchases drive down interest rates to spur recovery, boosting stock prices in the process, and talk of their dismantling can dampen stock prices by fanning uncertainty as to how equities will perform without a monetary crutch.
At the close of U.S. trading, the Dow Jones Industrial Average finished down 0.41%, the S&P 500 index fell 0.36%, while the Nasdaq Composite index fell 0.26%.
The economy is on the mend and will soon require less support from the Fed in the form of monthly bond purchases, the Fed minutes found.
"During this general discussion of policy strategy and tactics, participants reviewed issues specific to the Committee's asset purchase program. They generally expected that the data would prove consistent with the Committee's outlook for ongoing improvement in labor market conditions and would thus warrant trimming the pace of purchases in coming months," the minutes read.
The minutes sent share prices falling, while data released earlier also painted a picture of an economy in less need of Fed support.
The U.S. Commerce Department reported that retail sales expanded 0.4% in October, blowing past expectations for a 0.1% gain after coming in flat the month earlier.
Elsewhere, the Commerce Department reported that wholesale business inventories inched up by 0.6% in September compared to expectations for a 0.3% gain.
The National Association of Realtors reported earlier that existing home sales declined 3.2% to a seasonally adjusted 5.12 million units in October from 5.29 million in September.
Analysts had expected U.S. existing home sales to fall 2.6% to 5.13 million units last month, though investors shrugged off the report on sentiments October is not a strong month for housing anyway.
Consumer price inflation figures largely met expectations.
U.S. Department of Labor said the country's consumer price index fell by a seasonally adjusted 0.1% in October, defying expectations for a 0.1% increase after rising by 0.2% in September.
Year-over-year, the U.S. consumer price index rose at an annualized rate of 1.0% last month, in line with estimates and slowing from 1.2% in September.
The core consumer price index, which is stripped of volatile food and energy costs, inched up 0.1% in October, in line with forecasts. Core consumer prices rose 0.1% in September.
The U.S. core CPI increased at annualized rate of 1.7% last month, unchanged from September and in line with expectations.
Still, stocks didn't plummet as investors concluded that any decision to taper asset purchases, most likely in early 2014, won't usher in an era of policy tightening.
Leading Dow Jones Industrial Average performers included Microsoft, up 0.93%, Pfizer, up 0.84%, and UnitedHealth, up 0.53%.
The Dow Jones Industrial Average's worst performers included Boeing, down 3.26%, Caterpillar, down 1.18%, and DuPont, down 1.11%.
European indices, meanwhile, finished largely lower.
After the close of European trade, the EURO STOXX 50 fell 0.06%, France's CAC 40 fell 0.09%, while Germany's DAX 30 rose 0.10%. Meanwhile, in the U.K. the FTSE 100 finished down 0.25%.
On Thursday, the U.S. is release data on producer price inflation, as well as the weekly report on initial jobless claims. The U.S. is also to release data manufacturing activity from the Philly Fed.