Market Wrap: Stocks Edge Lower on Rate-Rise Worries

APTOPIX Financial Markets Wall Street
Richard Drew/AP

By Caroline Valetkevitch

NEW YORK -- U.S. stocks edged lower Wednesday as minutes from the most recent Federal Reserve meeting gave investors few new clues as to when U.S. interest rates may rise.

The S&P 500 snapped a two-day streak of record closing highs.

Minutes of the U.S. central bank's Oct. 28-29 meeting, where policymakers decided to finally end their bond-buying stimulus, indicated a debate among policymakers over the outlook for inflation and the economy.

"The market doesn't really know how to react to this, whether it's a hawkish or dovish statement, but the reality is I think it's a truthful statement that we are in a very interesting spot with both headwinds and tailwinds facing this economy," said Burt White, managing director and chief investment officer at LPL Financial in Boston.

%VIRTUAL-WSSCourseInline-975%Following the release of the minutes, U.S. short-term interest-rate futures traders were still betting on a first Fed rate hike by September next year.

Tech names were among the biggest drags on the market, with the Nasdaq underperforming both the Dow and S&P 500. Shares of Microsoft (MSFT) fell 1.1 percent to $48.22 and shares of Qualcomm (QCOM) eased 2.1 percent to $70.47. Qualcomm on Wednesday gave a more conservative five-year outlook than in the past.

Among the S&P 500's biggest positives, Target (TGT) rose 7.4 percent to $72.50 and Lowe's (LOW) rose 6.4 percent to $62.26, both after results.

The Dow Jones industrial average (^DJI) fell 2.09 points, or 0.01 percent, to 17,685.73, the Standard & Poor's 500 index (^GPSC) lost 3.08 points, or 0.15 percent, to 2,048.72 and the Nasdaq composite (^IXIC) dropped 26.73 points, or 0.57 percent, to 4,675.71.

Earlier Wednesday, Goldman Sachs (GS) analysts said the Fed, once it begins to tighten monetary policy, would raise short-term interest rates faster and to higher levels than current market expectations.

Oplink Communications (OPLK) shares jumped 13.8 percent to $24.18. It is being purchased by Koch Optics, a subsidiary of privately held Koch Industries, for about $445 million.

Among other big movers, shares of JetBlue Airways (JBLU) rose 4.1 percent to $13.25 after it said it will charge certain customers for their first checked bag.

Declining issues outnumbered advancing ones on the NYSE by 1,899 to 1,176, for a 1.61-to-1 ratio on the downside; on the Nasdaq, 1,937 issues fell and 765 advanced for a 2.53-to-1 ratio favoring decliners.

About 5.8 billion shares changed hands on U.S. exchanges, compared with the 6.4 billion average for the month to date, according to data from BATS Global Markets.

The benchmark S&P 500 index posted 30 new 52-week highs and three new lows; the Nasdaq Composite recorded 42 new highs and 74 new lows.

-With additional reporting by Rodrigo Campo.

What to Watch Thursday:

  • The Labor Department releases its Consumer Price Index for October and weekly jobless claims, both at 8:30 a.m. Eastern time.

  • At 10 a.m.: The Conference Board releases leading indicators for October; the National Association of Realtors releases existing home sales for October; and Freddie Mac reports weekly mortgage rates.

  • Gap Inc. (GPS) reports quarterly financial results after U.S. markets close.