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Stocks drop following Fed doubts about stimulus
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NEW YORK (AP) — The stock market posted its biggest loss this year on news that Federal Reserve officials suggested the central bank scale back its effort to keep borrowing costs low. Minutes from the Fed's January meeting seemed to catch investors by surprise when they were released at 2 p.m. EST. Several Fed policymakers worried that the bank's program of buying $85 billion of bonds each month could eventually unsettle financial markets or cause the bank to take losses. Even so, most of the Fed officials thought the economy faced fewer risks than in December. Judging by the market's reaction, the Fed appears to be closer to ending its support for the economy than traders had expected, said Dan Greenhaus, chief global strategist at the brokerage BTIG. "We're at a point now where we're discussing how we're going to end this, not whether it's going to end," he said. The S&P 500 index sank 18.99 points to 1,511.95, a loss off 1.2 percent. That's the biggest one-day drop since Nov. 14, 2012. By buying bonds, the Fed drives up their prices and lowers interest rates, which have stayed at record lows. That keeps costs low for mortgages and other types of loans. The major indexes drifted sideways in morning trading then turned lower in the early afternoon after Caterpillar reported weaker sales of its heavy trucks and mining equipment. Stocks fell further after traders had time to digest the Fed minutes. The S&P 500 lost 11 points in the last hour and a half of trading. The Dow Jones industrial average fell 108 points, or less than 1 percent, to close at 13,927. Merck helped curb the Dow's fall, rising 1 percent, on news that it teamed up with a Korean drugmaker to create drugs. The Nasdaq composite fell 49 points, or 1.5 percent, to 3,164. News that Apple's major supplier, Foxconn, stopped hiring at its largest plant in China helped push down Apple's stock. Foxconn reportedly said the hiring freeze was not caused by slumping orders for iPhones. Apple fell $11.14 to $448.85. The stock market surged at the start of the year then drifted slightly higher in recent weeks with few major events to drive trading one way or another. That could change as soon as Congress returns from vacation next Monday. Deep federal spending cuts are scheduled to start March 1 unless Congress and the White House find a way to avoid them. Both the Dow and the S&P 500 have gained 6 percent for the year. The Nasdaq is up 5 percent. Before the Fed minutes came out, Phil Orlando, the chief market strategist at Federated Investors, said he believed the stock market had climbed too quickly and was prone to a big drop. He expected the S&P 500 to get knocked down by 3 percent or more in the coming weeks. Another budget battle in Washington could be the trigger. "There are a lot of us who say, 'We're a little bit ahead of ourselves here,'" Orlando said. "I still expect an all-time high for the S&P 500 this year, but it's going to get there in fits and starts." Even though housing construction slowed down in January, the Department of Commerce reported Wednesday that new housing starts remained strong. Builders started construction at an annual rate of 890,000 last month, down 8.5 percent from December. Applications for building permits increased. The Dow closed at its highest level of the year Tuesday, bringing it within one percent of 14,164, the record high reached more than five years ago. In the U.S. government bond market, the yield on the 10-year Treasury note slipped to 2.01 percent from 2.03 percent late Tuesday. The yield has climbed steadily higher since the start of the year, when it traded around 1.70 percent. Among companies making moves: — GPS device maker Garmin slumped 9 percent, the biggest drop in the S&P 500 index, after the company's results missed analysts' forecasts. Demand has waned for handheld navigation devices as more customers use maps on their smartphones. Garmin lost $3.70 to $35.54. — Food giant ConAgra gained 20 cents to $33.65 after it raised its profit forecast for the year. The company, whose brands include Chef Boyardee, said its acquisition of Ralcorp will add a nickel per share to adjusted earnings this year.3 cents to $33.78. 
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Today is Tuesday, May 21, the 141st day of 2013. There are 224 days left in the year.
1863 -- 150 years ago: On Monday the 11th inst. on Center Ridge in Mercer County,some citizens got out their cannon to celebrate the taking of Richmond. The gun wasoverloaded and burst. No one was injured, but one 30-pound piece went though thesecond story of a house.
1888 -- 125 years ago: The old folks concert at the Harper Theater last night to benefit St.Luke's Cottage Hospital, attracted a large audience.
1913 -- 100 years ago: Unless depredation by vandals in Rock Island parks is halted,special policemen will be assigned to night duty to protect the flowers and other property.
1938 -- 75 years ago: Station WHBF has received a special citation from Washington forits participation in Air Mail Week, which was observed this week throughout the nation.
1963 -- 50 years ago: A 10-year high in employment in the Quad-City area was reachedat the end of the last quarter, according to an industrial employment barometer releasedtoday.
1988 -- 25 years ago: Pee Wee teams will be able to play baseball and softball as usualon Diamond Three at Dorrance Park this summer, but after that, the ball field is doomed.County crews have put the diamond back in shape after heavy trucks marred the playingfield earlier this spring. Illinois Department of Transportation crews drove onto it to makeborings for the relocation of the junction of Illinois 84 and the Port Byron-Hillsdale road.
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