U.S. stocks fall as investors weigh Fed July meeting minutes

U.S. stocks fell, with the Dow Jones Industrial Average on track for its longest slump in 13 months, as investors weighed minutes of the Federal Reserve’s July meeting that showed officials support reducing stimulus this year if the economy improves.

Staples Inc. plunged 15% after declines in its retail and international business sparked in a reduction in its earnings forecast. Target Corp. slid 3.1% as profit fell 13% amid consumers’ caution in the face of higher taxes and unsteady employment. Lowe’s Cos. jumped 4.3% as the second-largest U.S. home-improvement retailer raised its full- year projection amid a housing recovery.

The Standard & Poor’s 500 Index fell 0.3% to 1,647.31 at 3:44 p.m. in New York, trimming an earlier loss of as much as 0.8%. The Dow dropped 75.46 points, or 0.5%, to 14,927.53. The measure retreated for a sixth day, the longest losing streak since July 2012. Trading in S&P 500 stocks was 4.6% below the 30-day average at this time of day.

“The Fed minutes continue to show this clear uncertainty as to when the monetary tightening will begin,” Erik Davidson, deputy chief investment officer for Wells Fargo Private Bank in San Francisco, said in a phone interview. His firm oversees $170 billion. “It will be a seminal moment when they move from the easing they’ve been in for years towards some incremental tightening steps. The minutes are quite clear in the sense that the Fed doesn’t know that we are there yet where the process can begin.”

Fluctuations

The S&P 500 fluctuated between gains and losses after the Fed released its minutes at 2 p.m. in Washington, with the gauge rising as much as 0.3%. Growing concern that the Fed would reduce stimulus this year contributed to the index’s 3.4% drop from a record close on Aug. 2 through yesterday. Fed monetary support helped propel the benchmark gauge up more than 150% from its bear-market low in 2009.

The Federal Open Market Committee’s minutes from the July 30-31 gathering released today showed officials were “broadly comfortable” with Chairman Ben S. Bernanke’s plan to start reducing bond buying later this year, with a few saying tapering might be needed soon.

FOMC participants continued to expect economic growth to pick up in the second half of 2013 and “strengthen further.” After the July meeting, policy makers affirmed a pledge to continue bond buying until seeing signs “the outlook for the labor market has improved substantially.” July hiring data, released after the Fed meeting, showed the smallest gain in four months and the lowest jobless rate in more than four years.

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