NEW YORK (REUTERS) - United States (US) stocks slid on Wednesday in a late selloff after minutes of the US Federal Reserve's latest policy-setting meeting indicated that the central bank will keep trimming its bond-buying stimulus unless there is a significant economic surprise.
The market also faced technical resistance as the S&P 500 earlier traded within a point of its record closing high set last month.
Minutes from the January meeting of the Federal Reserve's policy-setting committee showed that several policymakers wanted to hone in on the idea that their asset-purchase programme would be trimmed in predictable, US$10-billion (S$12.6 billion) steps unless there is a big economic surprise this year.
The statement doesn't deviate much from previous Fed communications, but market participants have been expecting the Fed to point to recent weakness in the economic data and reinforce their commitment to stimulating the economy.
"I think the rally that we've seen off the 1,750 low (on the S&P 500) was largely driven by the sense the Fed is going to slow down their retracement if it's necessary," said Mr Uri Landesman, president of Platinum Partners in New York.
"Anything that puts a crimp in that belief is going to scare this market," he said. "This market is trading at nosebleed levels, and so it will not have a huge tolerance even for news that can be shaded in a bad direction."
Data on Wednesday showed US housing starts recorded their biggest drop in almost three years in January. The seasonally-adjusted US Producer Price Index for final demand rose 0.2 per cent, no real indication of a broad pickup in inflation pressures.
The data was among a slew of recent economic reports affected by a severe US winter, including a US homebuilder confidence index on Tuesday, which suffered its largest ever one-month drop in February. The weather was also largely blamed for the sharp slowdown in hiring in December.
Some economists, however, lowered their first-quarter growth estimates on the back of the weak housing starts data. Goldman Sachs cut its first-quarter growth estimate by a tenth of a percentage point to a 1.8 per cent annual rate. Barclays reduced its forecast by 0.3 percentage point to a 1.9 percent rate.
The Dow Jones industrial average fell 89.84 points or 0.56 per cent, to end at 16,040.56. The S&P 500 slipped 12.01 points or 0.65 per cent, to finish at 1,828.75. The Nasdaq Composite dropped 34.83 points or 0.82 per cent, to close at 4,237.954.
The S&P 500 set an all-time closing high of 1,848.38 on Jan 15, and came within a point of that level at its session high on Wednesday.
Tesla shares fell nearly 5 per cent during regular trading hours, but jumped more than 12 per cent after the bell.
The stock could hit a record high above US$218 per share on Thursday. The electric car maker posted better-than-expected fourth-quarter results and said deliveries of its Model S electric sedan would surge more than 55 per cent this year.
Safeway Inc shares rose 3.2 per cent in extended-hours trading after the second-largest US mainstream grocery store operator said it is in talks about a possible sale of the company.
Chelsea Therapeutics International Ltd's shares soared 24.4 per cent to US$6.16 during regular trading a day after its drug Northera, which treats a rare form of low blood pressure associated with neurological disorders such as Parkinson's disease, won approval from the US Food and Drug Administration.
Kay Jewelers parent Signet Jewelers said it would buy smaller rival Zale Corp for US$21 per share in cash, valuing the mid-tier jeweler at about US$690 million. The offer represents a premium of about 41 per cent to Zale's close of $14.91 on Tuesday.
Shares of Signet Jewelers gained 18.1 per cent to US$93.65. Zale jumped 40.3 per cent to US$20.92.
About 6.9 billion shares traded on US exchanges, roughly in line with the 7.06 billion average so far in February, according to data from BATS Global Markets.
Declining issues outnumbered advancing ones on the New York Stock Exchange by a ratio of 9 to 5. On the Nasdaq, about five stocks fell for every two that rose.
