S&P 500 ends flat in wake of Fed minutes

Business Times

NEW YORK: The SandP 500 finished nearly flat on Wednesday as equity indexes had a muted reaction to the minutes from the US Federal Reserve's most recent meeting, while Micron's strong results helped buoy the Nasdaq.

Minutes of the Fed's December 17-18 meeting, after which the US central bank announced its decision to begin trimming its monthly bond purchases, showed Fed officials were careful to tread lightly as they embarked on the tapering process.

The Fed's accommodative policies were the main driver of the SandP 500's rally of nearly 30 per cent in 2013. The programme is expected to keep a floor under stock prices for as long as it continues.

"The financial markets really didn't move at all, but typically history would suggest they need a little bit of time to just digest these things," said Darrell Cronk, regional chief investment officer of Wells Fargo Private Bank in New York.

"What we need to recognize is since December 18, we've seen a significant improvement in the economic data. If we get a 200,000 or north jobs report on Friday, it increases the likelihood, along with that improving data, the Fed continues its tapering process at the January meeting."

Earlier in the session, a report by ADP, a payrolls processor, showed US private-sector employers added 238,000 jobs in December, more than expected and the best read since November 2012, while November 2013 numbers were revised higher.

The Dow Jones industrial average fell 68.20 points or 0.41 per cent, to end at 16,462.74. The SandP 500 dipped just 0.39 of a point, or 0.02 per cent, to finish at 1,837.49. The Nasdaq Composite rose 12.43 points or 0.30 per cent, to close at 4,165.611.

The SandP 500 has fallen 0.6 per cent over the first five sessions of the year. According to the January effect watched by some market participants, the first month dictates the stock market's fortunes for the year - and the first five trading days are important in determining the outcome.

However, Credit Suisse data shows that any month, except October, could be used to determine the market's momentum 11 months ahead more than 50 per cent of the time.

Micron Technology shares soared 9.9 per cent to close at US$23.87 and helped bolster the Nasdaq a day after the chipmaker reported higher-than-expected quarterly profits.

Microsoft shares slid 1.8 per cent to US$35.76, pressuring the Dow. Microsoft is closer to naming a new chief executive officer, according to a source familiar with the board's thinking, but it lost a front-runner candidate on Tuesday when Ford's CEO Alan Mulally said he would not be going to the software giant.

Ford's stock rose one per cent to end at US$15.54.

Shares of JC Penney Co Inc plunged 10 per cent to close at US$7.37 after the department store chain said on Wednesday that it was "pleased" with its holiday season sales without giving specific results. That prompted many on Wall Street to say the retailer's sales may have declined last month.

Apollo Education Group Inc shares jumped 14.2 per cent to US$30.76 after the owner of the University of Phoenix reported a quarterly profit well ahead of Wall Street expectations.

The pharmaceutical sector remained a hotbed for mergers and acquisitions. Forest Laboratories agreed to buy privately held specialty pharmaceutical company Aptalis Holdings Inc for about US$2.9 billion. Forest Labs' stock surged 17.9 per cent to US$69.30 and ranked as the SandP 500's biggest gainer.

NuPathe Inc leaped 35.6 per cent to US$4.38 after the company said it received a buyout offer from Israel's Teva Pharmaceutical Industries Ltd for US$114 million plus milestone payments related to NuPathe's migraine treatment. Teva's US-listed shares shed 0.4 per cent to US$41.05.

Volume was modest, with about 6.05 billion shares traded on US exchanges, slightly below the 6.19 billion average so far this month, according to data from BATS Global Markets.

Declining stocks outnumbered advancing ones on the New York Stock Exchange by a ratio of 17 to 13, while on the Nasdaq, 13 stocks fell for every 12 that rose.-- Reuters