Market Wrap: Stocks End Nearly Flat; Fed Minutes Limit Drop

Dow Jones Index Crosses 18,000 Mark
Andrew Burton/Getty Images

By Caroline Valetkevitch

NEW YORK — The Dow and SP 500 ended barely lower Wednesday after a drop in energy shares but declines were limited by minutes from the latest Federal Reserve meeting, which showed policymakers are concerned about raising interest rates too soon.

Exxon Mobil (XOM), which fell 2.2 percent to $91.01, was the biggest drag on both the SP 500 and Dow following an explosion and fire at an Exxon refinery near Los Angeles and a drop in crude oil prices. Also, Berkshire Hathaway (BRK-A) (BRK-B) disclosed shedding a $3.74 billion investment in Exxon.

The SP 500 was down 1.5 percent, with U.S. crude oil falling 2.6 percent to settle at $52.14 a barrel.

The minutes reflect our view that while the economy is growing, an interest rate liftoff is not a slam dunk at this point.

Fed policymakers expressed concern last month that raising interest rates too soon could pour cold water on the U.S. economic recovery, according to minutes from the Fed’s Jan. 27-28 meeting.

“The minutes reflect our view that while the economy is growing, an interest rate liftoff is not a slam dunk at this point,” said Alan Gayle, senior investment strategist at RidgeWorth Investments in Atlanta.

“Clearly, there are some more dovish members that feel the economy is still not strong enough to support steady pricing, so that is holding the Fed back from normalizing policy.”

Stocks generally have risen with any sign the Fed could raise rates later rather than sooner.

An index of SP 500 utilities, which tend to do well in a low interest-rate environment, jumped 2.4 percent and was the biggest positive in the SP 500 as bond yields declined. SP financial shares, which tend to benefit from a higher rate environment, declined 0.7 percent.

The Dow Jones industrial average (^DJI) fell 17.73 points, or 0.1 percent, to 18,029.85, the Standard Poor’s 500 index (^GSPC) lost 0.66 points, or 0.03 percent, to 2,099.68 and the Nasdaq composite (^IXIC) added 7.10 points, or 0.14 percent, to 4,906.36.

The day’s move breaks a two-session string of record closing highs for the SP 500.

Other Factors

Investors also weighed developments involving Greece. The European Central Bank agreed a modest increase in emergency funding for Greek banks, putting pressure on Athens to strike a financing deal with its European partners before its lenders run out of money.

Fossil Group (FOSL) shares sank 15.7 percent to $83.69 after the fashion accessory-maker reported quarterly earnings and revenue below expectations.

Also on the earnings front, Garmin (GRMN) fell 10.7 percent to $50.71 after the navigation device-maker gave an earnings outlook below estimates.

About 6 billion shares changed hands on U.S. exchanges, below the 7.2 billion average for the month so far, according to BATS Global Markets.

Advancing issues outnumbered declining ones on the NYSE by 1,662 to 1,403, for a 1.18-to-1 ratio on the upside; on the Nasdaq, 1,429 issues rose and 1,303 fell for a 1.10-to-1 ratio favoring advancers.

The SP 500 posted 58 new 52-week highs and two new lows; the Nasdaq composite recorded 83 new highs and 26 new lows.

With additional reporting by Sam Forgione.

What to watch Thursday:

  • The Labor Department releases weekly jobless claims at 8:30 a.m. Eastern time.
  • At 10 a.m., the Federal Reserve Bank of Philadelphia releases its survey of manufacturing conditions in the Mid-Atlantic region; the Conference Board releases leading indicators for January; and Freddie Mac releases weekly mortgage rates.

Earnings Calendar
These selected companies are scheduled to release quarterly financial results:

  • Bloomin Brands (BLMN)
  • Boise Cascade (BCC)
  • Cedar Fair (FUN)
  • Hormel Foods (HRL)
  • Imax (IMAX)
  • Mohawk Industries (MHK)
  • Newmont Mining (NEM)
  • Noodles Co. (NDLS)
  • Nordstrom (JWN)
  • (PCLN)
  • Six Flags Entertainment (SIX)
  • Walmart Stores (WMT)
  • 1. Hawaii: Exceptional trees

  • 2. Maine: Blueberries and clams

  • 3. Alabama: Playing cards

  • ​4. Virginia: Sheep

  • In 2013, in part to meet federal pollution-control mandates, Maryland legislators enacted fees on property owners in Baltimore and nine other Maryland counties, aimed at curbing storm water runoff. The fees were meant to fund programs to improve the water quality of the Chesapeake Bay, the largest marine estuary in the U.S. Sounds simple enough, but the way Maryland legislators wrote the law has led to an angry backlash in some corners against this so-called “rain tax.” One way localities calculate the tax is by measuring how much of a landowner’s tract is “impervious” to precipitation seeping into the ground. So the more you’ve developed it with buildings, driveways, tennis courts and the like, the less it will absorb and the more you pay. That’s how the tax is being implemented (through aerial and satellite photos) in Montgomery County, a heavily developed suburb of Washington, and many landowners are up in arms. New Maryland Gov. Larry Hogan, a Republican, campaigned against this tax in his winning 2014 campaign and has introduced legislation to repeal it, though it’s not clear that will fly with Democratic state legislators. Money still needs to be raised to satisfy the federal pollution mandates, but the methods may change.
    ​5. Maryland: The rain?
  • Kansas is among a bevy of jurisdictions that allows sale of lower-alcohol beer (the term of art is “cereal malt beverage”) in convenience and grocery stores. But Kansas also taxes “3.2” beer differently — and there lies the rub. At a liquor store, all products, including, say, a conventional six-pack of Budweiser (with 5 percent alcohol by volume), are taxed at a special rate of 8 percent. At the convenience store down the street, however, ordinary sales tax is levied on the lower-alcohol, cereal malt beverage bottle of Bud. That often ends up being more than the 8 percent alcohol tax. In Pomona, Kansas, for example, the effective rate on the weaker beer would be 9.7 percent. Go figure.
    6. Kansas: Weak beer
  • When it comes to taxation, the rule is generally the stronger the booze, the higher the tax (that’s why Kansas’s beer tax scheme is an anomaly). California follows that curve, but at 100 proof, you better be ready to pay through the nose. Distilled spirits are taxed at $3.30 a gallon if below 100 proof, or 50 percent alcohol. Go over that, like with Bacardi 151, and the tax doubles to $6.60. Maryland also notes the 100 proof point, but it only adds 1.5 cents per proof, per gallon to the relatively modest liquor tax of $1.50 per gallon, taking the Bacardi 151 to $2.27 per gallon.
    ​7. California: Strong liquor
  • 8. Nevada: Entertainment

  • ​9. New Jersey: Costly cars with bad mileage

  • 10. New Mexico: Centenarians

Leave a Reply