NEW YORK: U.S. stocks fell Thursday after the Federal Reserve signaled a likely end in 2013 to its bond purchases, offsetting upbeat jobs data from the private sector a day before the Labor Department’s nonfarm-payrolls report for December.
Minutes released on Thursday afternoon from the Federal Reserve’s December meeting had several central bankers seeing either a slowdown or outright halt to Fed bond purchases before the end of 2013.
The minutes of the Fed meeting sent stocks on Wall Street lower, breaking a two-session winning streak.
The Dow Jones industrial average fell 21.19 points, or 0.2 percent, to end at 13,391.36. UnitedHealth Group Inc. slumped 4.7 percent, the biggest decliner among the Dow’s 30 components, after Deutsche Bank downgraded the managed-care provider to hold from buy.
The Standard & Poor’s 500 index lost 3.05 points, or 0.2 percent, to 1,459.37, with technology and materials hardest hit and consumer discretionary and health-care faring best among its 10 major sectors.
Shares of TJX Cos. and Ross Stores Inc. advanced after the department store chains’ monthly same-store sales beat forecasts.
Family Dollar Stores Inc. shares fell 13 percent after the discount chain projected second-quarter earnings beneath expectations.
Hormel Foods Corp. shares gained after the maker of Spam lunch meat said it would acquire the Skippy peanut butter business for about $700 million.
The Nasdaq composite index shed 11.70 points, or 0.4 percent, to 3,100.57.
The ADP Research Institute estimated the U.S. economy added 215,000 private-sector jobs in December, with the better-than-expected figure boding well for today’s jobs report.
The ADP tally is “the strongest monthly gain since February,” Dan Greenhaus, chief global strategist at BTIG LLC, noted in an email.
Phil Orlando, equity market strategist at Federated Investors, said: “The ADP number was pretty good, so now everybody is going to move their payrolls estimates up. We’re making slow progress toward better numbers.”
The Labor Department will release its payrolls report today. While the consensus estimate from economists surveyed by MarketWatch calls for an additional 160,000 jobs last month, Orlando said there was now an upside bias, and his research suggested 175,000.
“We ought to be printing 250,000 or 300,000, but the good news is the numbers aren’t negative; we aren’t in recession,” he said.
Separately, the Labor Department said initial claims for unemployment benefits last week jumped 10,000 to a five-week high of 372,000. Read: Jobless claims rise 10,000 to 372,000.
“Claims were a little soft. But because of New Year’s and Christmas week, I’m inclined to ignore those numbers, so I’m more focused on ADP,” Orlando said.
“What we’ve enjoyed over the last two days is a massive sigh-of-relief rally,” Orlando said of the market’s two-day jump that came amid an 11th-hour deal to avert the fiscal cliff of steep spending cuts and tax hikes from taking place this year.
Investors cheered the last-minute accord to avoid what economists had feared would push the U.S. back into recession, though analysts cautioned against getting overly euphoric.
Automatic spending cuts were merely delayed by two months. And the issue of the debt ceiling is also yet to be resolved.