NEW YORKâStocks slumped after the Federal Reserve showed rising unease about its efforts to support the economy, sending the Dow Jones Industrial Average to its second-biggest drop this year.
The Dow Jones Industrial Average fell 108.13 points, or 0.6%, to 13927.54, its sharpest decline since Feb. 4., when the blue chips shed 130 points.
The Standard & Poor's 500-stock index dropped 18.99 points, or 1.2%, to 1511.95. Wednesday's tumbleâits biggest since Novemberâcomes after the S&P 500 banked its highest close since 2007 on Tuesday. The Nasdaq Composite Index lost 49.19 points, or 1.5%, to 3164.41.
Major indexes sank to session lows after the release of minutes from the Fed showed that officials worried last month the central bank's easy-money policies could lead to instability in financial markets, and might be hard to pull back in the future.
The Fed's "policy of printing money is still entrenched, but they're thinking more about how to get out," said Rick Fier, director of equity trading Conifer Securities. "It kind of puts them between a rock and a hard place."
Stimulus measures from the Fed have been cited as a key factor for stock gains in recent years, and investors were watching closely for signs of a change in direction. The programs aim to spur economic growth by lowering long-term interest rates.
"The journey to higher interest rates is going to be a long and arduous process," said Terry Sandven, chief equities strategist at U.S. Bank Wealth Management. "Year to date, [stock] gains have been superb and above expectations, so it stands to reason that the market will take a bit of pause."
All 10 of the S&P 500's sectors fell, led by materials stocks such as Alcoa (AA)
Shares of Office Depot (ODP)
On the economic front, new residential construction dropped more than expected in January from the month earlier, although December's construction figure was revised upward, the Commerce Department said. Meanwhile, the number of new building permits rose last month to the highest level since June 2008.
In the Markets
Wholesale prices rose by 0.5% in January, or more than expected. Excluding food and energy costs, which tend to be volatile, prices rose 0.2%, in line with expectations, according to the Labor Department.
European markets eased. The Stoxx Europe 600 slipped 0.3% after minutes of the latest Bank of England meeting showed that some voices within the central bank had pushed for additional stimulus.
Asian markets rallied after data showing Japan's exports grew faster than expected, boosted by a return to growth in exports to China. Japan's Nikkei gained 0.8%, while the Shanghai Composite Index added 0.6%.
Commodities suffered broad losses. Front-month February gold futures shed 1.6% to settle at $1,577.60 a troy ounce, its lowest level since July. March crude-oil futures slumped 2.3% to settle at $94.46 a barrel. The dollar rose against the euro but fell versus the yen. The yield on benchmark 10-year Treasury bonds fell to 2.018%, as demand rose.
Toll Brothers (TOL)
Demand Media (DMD)
Millennial Media (MM)
Harvest Natural Resources (HNR)
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