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Stocks Thumped by Fed's Disclosure on Stimulus


NEW YORK ( TheStreet) -- Major U.S. stock averages dipped Thursday following a downtrodden tone from the latest minutes of the Federal Open Market Committee, the policy-making wing of the Federal Reserve . The surprise news outweighed stronger-than-expected employment data for December and a number of upbeat monthly retail-sales reports.

Stock action was more subdued as equities traded in the red for much of the morning, in contrast to the big surge in stocks the previous session. Investors on Thursday booked profits amid worries that U.S. lawmakers' last-minute budget agreement falls short of dealing with the country's deficit.

The FOMC minutes said that its staff "reported on potential risks to financial stability, including those associated with a disorderly resolution of the so-called fiscal cliff, a delayed increase in the federal debt ceiling, or a future deterioration of financial conditions in Europe."

The Dow Jones Industrial Average was off 21 points, or 0.2%, at 13,391.

Breadth was negative, with losers beating winners by 18 to 12. Decliners included UnitedHealth (UNH) , DuPont (DD) , General Electric (GE) and Microsoft (MSFT) .

Advancers in the Dow included Hewlett-Packard (HPQ) , Alcoa (AA) , Caterpillar (CAT) and Merck (MRK) .

The S&P 500 fell 3 points, or 0.2%, to 1,459. The tech-heavy Nasdaq lost 12 points, or 0.4%, at 3,101.

Sectors traded mixed in the broad market. Conglomerates, consumer non-cyclicals, basic materials, technology, services, utilities and financials were edging lower, while energy, consumer cyclicals, transportation, health care and capital goods were in the green.

Volumes were at 3.77 billion shares at the New York Stock Exchange and 1.75 billion shares on the Nasdaq. Advancers were edging decliners narrowly by a ratio of 1.3-to-1 on the Big Board, but losers beat winners 1.1-to-1 on the Nasdaq.

Sentiment among the FOMC members was split, which was a notable point that hit investors.

The minutes revealed: "In considering the outlook for the labor market and the broader economy, a few members expressed the view that ongoing asset purchases would likely be warranted until about the end of 2013, while a few others emphasized the need for considerable policy accommodation but did not state a specific time frame or total for purchases. Several others thought that it would probably be appropriate to slow or to stop purchases well before the end of 2013."

One of the next major deadlines is the few weeks that Congress has left before it must raise the debt ceiling to avert a government default on bills and financial obligations. This means the Obama administration and Congress must tackle the sequestration issue that was pushed back for two months in the "fiscal cliff" deal.

Julia Coronado, chief North American economist at BNP Paribas, said the "two parties are yet again starting miles apart" on this issue, with Republicans having already indicated that they believe the tax side of fiscal policy has been addressed for now and their focus will be on spending.

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