Stocks partly erase early losses as trading remains shaky
US stocks have partly recovered from a sharp early loss as gains for banks cancel out losses from other sectors including retailers and technology companies
NEW YORK (AP) — U.S. stocks are slipping Wednesday after the Federal Reserve said some of its policymakers argued that the central bank should raise interest rates to a level that slows economic growth slightly. After years of record low rates, the fact that some policymakers are talking about using them to slow the economy is a big change.
Banks are rising on the prospect of faster increases in interest rates, but technology companies and retailers are falling. Homebuilders are sinking after the Commerce Department said construction of new homes dropped in September, and retailers are also sharply lower.
Stock trading has been erratic recently, and the market is coming off its biggest gain in more than six months. Earlier this month the benchmark S&P 500 index went through a six-day losing streak that included huge drops last Wednesday and Thursday. Then on Friday the S&P 500 jumped 1.4 percent, its biggest rally in three months, fell on Monday and surged even more on Tuesday. Trading had been steady from late June to early October.
KEEPING SCORE: The S&P 500 index fell 8 points, or 0.3 percent, to 2,801 as of 2:30 p.m. Eastern time. The Dow Jones Industrial Average slumped 139 points, or 0.5 percent, to 25,659. It lost as much as 319 points Wednesday morning before briefly turning higher. The Nasdaq composite slid 38 points, or 0.5 percent, to 7,607. The Russell 2000 index of smaller-company stocks skidded 12 points, or 0.8 percent, to 1,584.
MINUTES MADE: The Federal Reserve released minutes from its meeting in late September, when it raised interest rates for the third time this year. A few participants believed that the Fed's key interest rate would need to "become modestly restrictive for a time" to make sure inflation doesn't climb too high. Other officials felt the Fed shouldn't take that step unless there are signs the economy is overheating and inflation is rising quickly.
CRIBS: U.S. home construction fell 5.3 percent in September, according to the Commerce Department. The pace of homebuilding has slowed since May, and the report is the latest sign that the combination of rising home values and increasing mortgage rates may be weighing on the market. Mortgage buyer Freddie Mac said the average 30-year fixed-rate mortgage last week reached its highest level since 2011.
Lennar gave up 2.6 percent to $42.97 and PulteGroup shed 3.6 percent to $22.78. Home Depot fell 4.2 percent to $185.45 and Lowe's sank 3.3 percent to $102.45. The home improvement retailers have climbed in recent years as rising home prices pushed many homeowners to renovate their own homes instead of trying to buy new ones.
Other retailers also fell. Target lost 1.7 percent to $84.34 and Macy's dipped 4.6 percent to $31.96.
BANK ON IT: Insurer Prudential rose 2.1 percent to $99.91 after regulators lifted the strict government oversight that was imposed on the company after the 2008-09 financial crisis. Prudential was deemed "systemically important," which meant it was subject to special restrictions because of its importance to the financial system. It was the last company still carrying that label. Elsewhere, JPMorgan Chase added 1.2 percent to $109.96 and M&T Bank climbed 1.9 percent to $161.69 after its third-quarter report.
BIG BLUES: IBM sank 7.3 percent to $134.57 after its sales in the third quarter fell short of analysts' estimates. The technology company is on track for its worst loss since April. Other large technology companies also slumped. Oracle retreated 0.9 percent to $47.79 and Apple lost 0.6 percent to $220.07.
ENERGY: Energy companies declined as U.S. crude lost 3 percent to $69.75 a barrel in New York. Brent crude, the international standard, fell 2.2 percent to $79.65 a barrel in London.
Wholesale gasoline lost 3 percent to $1.92 a gallon and heating oil fell 1.2 percent to $2.31 a gallon. Natural gas jumped 2.5 percent to $3.32 per 1,000 cubic feet.
THE NEXT EPISODE: Netflix added 3.6 percent to $358.83 after the streaming video company said it picked up 7 million subscribers in the third quarter, a total that was above Netflix's own projections as well as analyst forecasts.
The stock set a record high in early July, but a week later, Netflix announced disappointing subscriber totals and gave a weak forecast and its stock tumbled. It is still about 15 percent below its highest price.
BONDS: Bond prices headed lower. The yield on the 10-year Treasury note rose to 3.17 percent from 3.15 percent.
CURRENCIES: The dollar rose to 112.23 yen from 112.18 yen. The euro fell to $1.1535 from $1.1578.
METALS: Gold slipped 0.3 percent to $1,227.40 an ounce. Silver lost 0.3 percent to $14.66 an ounce. Copper fell 0.1 percent to $2.78 a pound.
OVERSEAS: Germany's DAX and the French CAC 40 both fell 0.5 percent. In Britain, the FTSE slipped 0.1 percent.
Japan's benchmark Nikkei 225 jumped 1.3 percent and the Kospi in South Korea advanced 1 percent. Markets in Hong Kong were closed for a holiday.
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AP Markets Writer Marley Jay can be reached at http://twitter.com/MarleyJayAP