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Overnight Markets: US stocks decline on Fed minutes

Shared declined after minutes from the Fed’s last meeting showed a debate over further stimulus action.

Overnight Markets: US stocks decline on Fed minutes

Wall Street declined on Wednesday, with the Standard & Poor’s 500 Index registering its biggest decline since November, as minutes from the Federal Reserve’s last meeting showed a debate over further stimulus action.

The Dow Jones industrial average dropped 108 points, or 0.77%, to 13,928 at the close. The Standard & Poor's 500 Index fell 19 points, or 1.24%, to 1,512. The Nasdaq Composite Index lost 49 points, or 1.53%, to end at 3,164.

Shares declined after the minutes from the Fed’s most recent meeting suggested the central bank may slow or stop buying bonds sooner than expected. Many officials raised concern last month over potential costs of more asset purchases, suggesting that the QE programme may slow before the pickup in hiring it was intended to deliver.

Energy companies' shares suffered the most, hurt by disappointing results in the sector and a 2% drop in crude oil prices. Newfield Exploration plunged 9.3%, while Devon Energy Corp fell 6.6%. Both companies posted fourth-quarter losses, with Devon hurt as it wrote down

Housing shares also fell after weaker-than-expected results at Toll Brothers Inc and a drop in groundbreaking to build new U.S. homes in January. Toll Brothers' stock fell 9.1%.

On the positive side, Boeing was up 0.2% after a source told Reuters that the company had found a way to fix battery problems on its grounded 787 Dreamliner jets.

OfficeMax Inc declined 7%, while Office Depot slid 16.7% as the companies announced a $1.2 billion merger agreement. Rival Staples Inc plunged 7.2%. Caterpillar Inc. slid 2.5% after saying global retail machine sales dropped.

Freeport-McMoRan Copper & Gold Inc. fell 6%, while Cliffs Natural Resources slid 4.9%. Apple also declined after Foxconn halted recruitment until the end of March.

In Asia, shares fell on Thursday in afternoon trade amid concern the US Fed b may scale back economic stimulus and China will step up property curbs.

The MSCI Asia Pacific Index dropped 1.5% to 133 as of 1:24 pm in Tokyo. Japan’s Nikkei 225 Stock Average fell 1.2%. South Korea’s Kospi Index lost 0.6% after yesterday rising the most since September. Australia’s S&P/ASX 200 Index dropped 2.1%, headed for its biggest loss since May.

Hong Kong’s Hang Seng Index declined 1.8%, while China’s Shanghai Composite Index lost 2.7%, poised for the biggest drop since June.

3 comments so far. Why not have your say?

Chris Clark

Feb 21, 2013 at 09:00

How interesting. The Fed is hung up over considering to reduce QE, and the Bank of England is hung up over whether to increase QE.

What inferences might we draw from this?

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William Bishop

Feb 21, 2013 at 09:40

One logical inference might be that the US economy is in recovery mode, albeit slow, whereas the UK economy remains stagnant.

Another might be that markets are becoming neurotic on this particular issue - even if QE was to be discontinued, this will still leave a lot of excess liquidity washing around the system. It is only if QE can actually be reversed successfully that this might cease to be the case.

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Keith Snell

Feb 21, 2013 at 10:28

As both US & UK were foolish to introduce QE in the first place at least the UK has stopped digging the hole for now. Markets were due to drop as there are few macro changes over the last 12 months. Not having so much silly money being printed can only be beneficial.

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