Global stocks flat after Fed minutes

By Herbert Lash

NEW YORK (BestGrowthStock) – The dollar slipped and U.S. stocks (Read more about the stock market today. ) wavered on Wednesday after disclosures that Federal Reserve policy makers in June expressed concern about the pace of the U.S. recovery.

The dollar fell against the yen and the euro hit a two-month high as the release of minutes of the Federal Reserve’s June 22-23 policy meeting added to concerns about the path of the economic recovery. Earlier in the day, the government reported that U.S. retail sales in June declined for a second straight month.

Markets were choppy throughout the day as the fresh signs that economic growth looks sluggish at best dimmed the prospect of strong corporate results and tarnished the upbeat sentiment from blow-out quarterly results by top chip maker Intel.

Fed policy makers felt they should be ready to consider additional steps to boost the U.S. economy if an already softening outlook took a noticeable turn for the worse, the minutes showed.

The Fed’s minutes put the central bank in the slow patch camp, said Bucky Hellwig, senior vice president at BB&T Wealth Management in Birmingham, Alabama.

“Essentially, it has confirmed some of the fears of investors, namely that the recovery is going to take some time, and that’s the last thing we wanted to hear from the Fed,” Hellwig said.

Sales at U.S. retailers fell in June as weak receipts at automotive dealers and gasoline stations provided further evidence the U.S. recovery has slowed in recent months from an already-modest pace.

Technology shares rose after Intel Corp (INTC.O: ) posted results after the bell on Tuesday that beat analysts expectations by a wide mark, but the Dow and S&P ended the session close to break-even.

The Dow Jones industrial average (.DJI: ) closed up 3.70 points, or 0.04 percent, at 10,366.72. The Standard & Poor’s 500 Index (.SPX: ) fell 0.17 points, or 0.02 percent, at 1,095.17. The Nasdaq Composite Index (.IXIC: ) gained 7.81 points, or 0.35 percent, at 2,249.84.

Companies, which continue to do very well, will keep a bid under the market despite a slowing economy and consumer spending, said Stephen Massocca, managing director at Wedbush Morgan in San Francisco.

“The real question is going to be once earnings season is over and we start looking to economic data again, that is going to be problematic for the market,” Massocca said.

Global shares measured by MSCI’s all-country world index pared gains but were still up 0.4 percent.

Fed officials said they would need to consider whether “further policy stimulus might become appropriate if the outlook were to worsen appreciably.

The dollar was down against a basket of major currencies, with the U.S. Dollar Index (.DXY: ) down 0.32 percent at 83.374.

The euro was up 0.09 percent at $1.2738 after earlier hitting a two-month high. Against the yen, the dollar was down 0.45 percent at 88.27.

Oil settled near $77 per barrel as the combination of bullish U.S. crude inventory data and bearish economic news left oil seesawing between positive and negative territory.

U.S. crude settled down 11 cents to $77.04 after rising as high as $78.15. Brent crude was trading up 3 cents to $76.68 at 2:43 p.m. EDT (1843 GMT).

“Crude futures turned negative after the release of the minutes of the most recent Fed meeting on the lower growth outlook,” said Chris Dillman, analyst at Tradition Energy, Stamford, Connecticut.

“But I don’t think the revisions are big enough to warrant a deeper decline here in crude futures,” Dillman said.

U.S. Treasuries climbed as the weak retail sales data and the pared-back economic outlook from the Federal Reserve boosted demand for safe-haven debt.

The benchmark 10-year U.S. Treasury note was up 20/32 in price to yield 3.05 percent.

Ward McCarthy, chief financial economist at Jefferies & Co in New York, noted that Fed officials in June “were starting to discuss some options that they may take if the economy were to appear to be headed for another recession.

“It suggests that rates are going to stay low for a long time and if necessary the Fed will try to conjure up some other ways to support the economy,” McCarthy said.

Gold futures for delivery in August finished $6.50 lower at $1,207 an ounce in New York.

In Europe shares snapped a six-day winning run, with banks sliding on worries that tough new capital and risk rules will be imposed on the sector.

The FTSEurofirst 300 (.FTEU3: ) of top European shares fell less than 0.1 percent to close at 1,045.11 points.

Earlier in Asia, stocks rose to a three-week high. Japan’s Nikkei average (.N225: ) surged 2.7 percent to its highest close in three weeks, while the MSCI ex-Japan share index was up 1.4 percent.

(Reporting by Leah Schnurr, Vivianne Rodrigues, Brian Ellsworth and Chris Reese in New York; Amanda Cooper, Brian Gorman and Atul Prakash in London; Writing by Herbert Lash; Editing by Leslie Adler)

Global stocks flat after Fed minutes