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Fed minutes reveal FOMC considered rate hike pause
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Headline CPI cooler than expected, core remains sticky
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American Airlines falls on downbeat Q1 profit outlook
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Indexes down: Dow 0.11%, S&P 0.41%, Nasdaq 0.85%
(Updates with closing prices)
By Stephen Culp
NEW YORK, April 12 (Reuters) - U.S. stocks ended lower
on Wednesday after minutes from the Federal Reserve's March
policy meeting revealed concern among several members of the
Federal Open Markets Committee (FOMC) regarding the regional
bank liquidity crisis.
The minutes followed a cooler-than-expected inflation report
which belied stickier underlying data and cemented the
likelihood of another policy rate hike when the Fed convenes
next month.
All three major U.S. stock indexes seesawed throughout the
session to close in negative territory.
"The minutes were clear that there's ongoing Fed concern
with respect to the banking crisis as well as elevated prices,"
said Greg Bassuk, chief executive officer of AXS Investments in
New York.
The indexes started gyrating as market participants parsed
the Labor Department's Consumer Price Index (CPI).
That report, on prices urban consumers pay for a basket of
goods and services, came in below analysts' expectations,
suggesting that the Fed's efforts to tame inflation is taking
effect.
However, core CPI - which strips out volatile food and
energy items - hit the consensus bull's eye, and remains well
above the Fed's average annual 2% target rate.
"This week is an inflection point as investors are searching
for surer footing in advance of corporate earnings and the PPI
(producer prices) report coming out tomorrow," Bassuk said.
"(Economic) data has been very mixed so investors are
overacting to any positive or negative hint of Fed rate hike
policy. Volatility will continue, investors will have to buckle
their seatbelts. There's so much going on now causing
uncertainty for both Wall Street and Main Street."
At last glance, financial markets have priced in a 70%
likelihood of another 25 basis point interest rate hike at the
conclusion of the FOMC's policy meeting next month.
The next market-moving catalyst is likely to be
first-quarter earnings season, which kicks off on Friday with
results from three big banks - Citigroup Inc , JPMorgan
Chase & Co and Wells Fargo & Co .
Analysts now expect aggregate first-quarter S&P 500 earnings
down 5.2% year-on-year, a stark reversal from the 1.4% annual
growth seen at the beginning of the quarter.
The Dow Jones Industrial Average fell 38.29 points, or 0.11%,
to
33,646.5 ; the S&P 500 lost 16.99 points, or 0.41%, at
4,091.95 ; and the Nasdaq Composite dropped 102.54 points, or 0.85%, to
11,929.34 .
Among the 11 major sectors of the S&P 500, seven ended in negative territory, with consumer discretionary suffering the largest percentage loss. Industrials led the gainers.
American Airlines Group Inc slid
9.2 % after it
forecast a lower-than-expected first-quarter profit.
Declining issues outnumbered advancers on the NYSE by a 1.08-to-1 ratio; on Nasdaq, a 1.69-to-1 ratio favored decliners.
The S&P 500 posted 12 new 52-week highs and two new lows; the Nasdaq Composite recorded 64 new highs and 187 new lows.
Volume on U.S. exchanges was 10.40 billion shares,
compared with the 11.78 billion average over the last 20 trading
days.
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US inflation, Fed rates and Markets Inflation ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
(Reporting by Stephen Culp; Additional reporting by Sruthi
Shankar, Ankika Biswas in Bengaluru and Richard Chang)
