US stocks fall as Fed notes suggest stimulus cuts soon

Traders work on the floor of the New York Stock Exchange at the closing bell on Nov 18, 2013. US stocks fell on Wednesday after minutes from the last Federal Reserve policy meeting said the central bank could scale back its stimulus program "in comin
Traders work on the floor of the New York Stock Exchange at the closing bell on Nov 18, 2013. US stocks fell on Wednesday after minutes from the last Federal Reserve policy meeting said the central bank could scale back its stimulus program "in coming months." -- PHOTO: AFP

NEW YORK CITY (AFP) - US stocks fell on Wednesday after minutes from the last Federal Reserve policy meeting said the central bank could scale back its stimulus program "in coming months." The Dow Jones Industrial Average lost 66.21 (0.41 per cent) at 15,900.82.

The broad-based S&P 500 fell 6.50 (0.36 per cent) to 1,781.37, while the tech-rich Nasdaq Composite Index declined 10.28 (0.26 per cent) to 3,921.27.

All three indices traded in positive territory for most of the day before turning negative following the release of the minutes of the Fed's October 29-30 policy meeting, which suggested its US$85 billion (S$105.7 billion) a month in asset purchases could soon be reduced.

Participants expected "ongoing improvement in labor market conditions" that would "thus warrant trimming the pace of purchases in coming months," the minutes said.

The minutes reiterated that any such move was contingent on better economic data.

Tobacco manufacturer Philip Morris fell 2.4 per cent after forecasting total international cigarette industry volume would decline 3.0 per cent in 2013 and an additional 2-3 per cent in 2014, with a 7-8 per cent drop in the EU region.

Agriculture equipment company Deere jumped 2.1 per cent after results bested expectations by a wide margin. Per-share earnings came in at US$2.11 compared with the US$1.89 expected by analysts. The company pointed to major new factories added in Brazil, China and other emerging markets.

Dow component Boeing fell 3.3 per cent after Oppenheimer downgraded the stock, citing a lack of near-term catalysts for further gains following a steep rise over the last 12 months, according to the Street.com.

Caterpillar, another Dow component, lost 1.2 per cent after reporting that retail machinery sales fell 12 per cent in October compared with the year-ago period.

Home-improvement retailer Lowe's tumbled 6.2 per cent after earnings came in a penny shy of expectations at 47 cents per share. The company boosted its full-year profit forecast to US$2.15 per share from US$2.10, but that was still lower than the US$2.19 expected by analysts.

Department store chain J.C. Penney vaulted 8.4 per cent after the company forecast improving comparable store sales and gross margins in the fourth quarter. The struggling retailer lost US$489 million in the third quarter.

Bond prices fell. The yield on the 10-year US Treasury jumped to 2.79 per cent from 2.71 per cent on Tuesday, while the 30-year increased to 3.90 per cent from 3.80 per cent. Bond prices and yields move inversely.