Stocks Drop on Fed Minutes

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The markets fell solidly into negative territory after minutes from the Fed's last meeting showed strong divides on whether the central bank should offer further monetary stimulus.

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Today's Markets

As of 3:15 p.m. ET, the Dow Jones Industrial Average fell 86.1 points, or 0.66%, to 12570, the S&P 500 slid 4.2 points, or 0.31%, to 1337 and the Nasdaq Composite dropped 26 points, or 0.9%, to 2876.

The markets have fallen for four days in a row, as traders have been confronted with mixed data on the global economy and confusing signals from the eurozone. Wall Street is now set to extend that streak by a day.

Minutes from the Federal Open Market Committee’s June meeting revealed Fed officials expect the U.S. economy to continue expanding more slowly than expected, with the unemployment rate falling “only slowly.”  The policy-setting board continued discussing the prospect of further monetary stimulus, but divisions remained, partially stemming from a disagreement on the underlying causes of the weak employment growth. The central bank also sees the deterioration in Europe and slowing in China as major risk factors.

The Fed has been faced with a considerable amount of data suggesting the rate of expansion in the U.S. economy has slowed down dramatically, coupled with three-straight months of tepid job growth.

Data released on the day were mostly in line with estimates.

The U.S. trade deficit fell to $48.68 billion in May from an upwardly revised $50.6 billion in April. Economists were expecting the deficit to narrow to $48.5 billion from an initially reported $50.06 billion. The data figure directly into broader measures of economic growth; the larger the deficit, the more it drags growth down. It also provides a picture of how strong domestic and international demand is holding up.

A separate report from the Commerce Department showed wholesale inventories rising 0.3% in May from April. Higher inventories generally imply companies are purchasing goods and adding to their stocks in anticipation of higher demand. However, wholesale sales dipped 0.8% on a month-to-month basis in the biggest decline since March 2009. The biggest decline was in petroleum sales, which tumbled 4.7%.

It has been a volatile week for oil futures, with traders paying close attention to the narrowly averted oil-worker strike in Norway. The benchmark contract traded in New York jumped $1.90, or 2.3%, to $85.81 a barrel. Wholesale New York Harbor gasoline rose 0.8%, to $2.769 a gallon.

In metals, gold dipped $4.10, or 0.26%, to $1,576 a troy ounce.

In corporate news, Peregrine Financial Group filed for Chapter 7 bankruptcy after regulators accused the brokerage of misappropriating millions of dollars in customer funds. People involved in the futures industry said the move may erode confidence as it occurred just months after the collapse of MF Global.

"It’s not as big as MFGlobal but a repeat is not good for confidence in futures brokers and for the futures industry," Olivier Jakob, managing director at Petromatrix, based in Switzerland wrote in an e-mail.

Foreign Markets

The Euro Stoxx 50 rose 0.2% to 2246, the English FTSE 100 fell 0.01% to 5664 and the German DAX climbed 0.24% to 6454.

In Asia, the Japanese Nikkei 225 slipped 0.08% to 8851 and the Chinese Hang Seng edged higher by 0.12% to 19420.