Dow off 65 as Fed signals no need for more stimulus

Updated: 7:21 p.m. ET

Stocks slumped this afternoon after minutes from the Federal Reserve's March meeting showed the central bank did not appear ready to expand its efforts to stimulate economic growth. Instead, the central bank wants to wait to see if the economic recovery can continue on its own.

The Fed's reluctance surprised Wall Street, which was assuming more stimulus efforts were ahead. The Dow Jones industrials ($INDU) saw a modest decline turn into a loss of more than 130 points before bargain hunters cut the decline in half. The dollar rose as interest rates moved higher. Energy, financial and materials stocks were the day's losers.

The slump came along as March auto sales growth, while strong, was not quite as robust as expected. General Motors (GM) shares were lower after reporting an 11.8% sales gain. Wall Street was looking for a 20% gain.

Apple (AAPL) surged to a new intraday high of $632.21 before falling back to $629.32, up $10.69. The gains were prompted by analysts' continuing to push price targets higher. Piper Jaffray's Gene Munster said on CNBC that Apple's market capitalization would reach $1 trillion by 2014. He also flatly predicted Research In Motion (RIMM) would not survive Apple's competitive pressure. RIM shares were off $1.36 to $13.01.

The Dow finished down 65 points to 13,200. The Standard & Poor's 500 Index ($INX) was off 6 points to 1,413, and the Nasdaq Composite Index ($COMPX) was off 6 points to 3,114.

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The Nasdaq-100 Index ($NDX) closed down 2 points to 2,783. The loss would have been larger were it not for Apple, which represents more than 12% of the market capitalization. Apple contributed 9 points to the index.

Energy was the weakest market sector, followed by financials and materials, as lower oil prices and concern over Europe were issues for many traders. Exxon Mobil (XOM) was down $1.24 to $85.83. JPMorgan Chase (JPM) was down 41 cents to $45.42.

In addition to the Fed minutes, investors had been disappointed by a government report showing factory orders missed estimates slightly. Also helping the dollar move higher were concerns that the European debt crisis might erupt with pronounced weakening of Spain's economy.

Spain's public debt will rise to a record this year as it sells almost 37 billion euros ($49 billion) of bonds to finance a budget deficit that was nearly three times the euro-area limit last year. At the same time, unemployment is expected to rise to 24.7% from 23.6% now.

A lower open on Wednesday?
Futures trading suggests the U.S. market will open slightly lower on Wednesday. The government will release its weekly report on oil inventories.

Apple will be in focus in part because flash-memory maker SanDisk (SNDK) warned late today that fiscal-first-quarter​ revenue and earnings will be lower than expected. The company, whose chips are used in smart phones and in other applications, expects to report $1.2 billion
in revenue for the quarter, down from prior guidance of $1.3 billion to $1.35 billion. Its gross margin, a key profitability measure, will be below 39%. It had projected 39%-to-42%.

Apple is a customer.

SanDisk shares were down 6.6% to $46.75 after hours; they'd risen 45 cents to $50.05 in regular trading.

In addition, the ADP National Employment Index, a measure of changes in private-sector employment, will come out. Nomura Securities sees the report showing 235,000 private-sector jobs created in March. ADP estimated 216,000 in February.

Lastly, the Institute for Supply Management's Non-Manufacturing Index for March will come out. Nomura sees this rising to 57.7 from 57.3 in February. A reading above 50 means the sector is expanding.

Earnings are due from Bed Bath & Beyond (BBBY) and Monsanto (MON).

Energy prices -- New York close
			Tues.			Mon.			Month chg.			YTD chg.
Crude oil (-CL)			$104.01			$105.23			0.96%			5.24%
(per barrel)
Heating oil (-HO)			$3.2275			$3.2496			1.81%			10.75%
(per gallon)
Natural gas (-NG)			$2.1870			$2.1520			2.87%			-26.83%
(per mil. BTU)
Unleaded gasoline (-RB)			$3.3954			$3.3822			2.64%			27.77%
(per gallon)
Brent crude			$124.86			$125.43			1.61%			16.28%
(per barrel)
Retail gasoline			$3.9230			$3.9250			-0.05%			19.75%
(per gallon; AAA)

Is the Fed pulling back?
Members of the Federal Open Market Committee, the Fed's rate-making body, did not appear ready to continue, much less extend, its efforts to stimulate the economy through so-called quantitative easing -- the purchases of Treasury and related securities to inject more money into the banking system.

The FOMC will continue to buy in bonds until June, the minutes suggest. But that may end the Fed's efforts unless the economy starts to contract.

Interest rates promptly moved higher because the Fed has been the largest buyer of Treasury securities in the last few years. The 10-year Treasury yield jumped to 2.284% from Monday's 2.193%. The yield had been down as much as 2.152% in the morning.

Against that theme was the clear signal from the minutes that the Fed is not likely to raise interest rates any time soon. Most FOMC members "did not interpret the recent economic and financial information as pointing to a material revision to the outlook for 2013 and 2014."

What looks like policies working against each other took some of the edge off the market's decline.

U.S. pump prices fall -- barely
The retail price of gasoline actually fell  today for first time in 25 days, according to AAA's Daily Fuel Gauge Report. The report showed the national average retail price of unleaded gas was $3.923 a gallon, down from $3.925 on Monday.

Crude oil (-CL) settled down $1.22 to $104.01 a barrel. Brent crude was down 38 cents to $125.05 a barrel.

Gold (-GC) was off $7.70 to $1,677 an ounce. Silver (-SI) was off 16.7 cents to $33.27 an ounce. Copper (-HG) fell very slightly to $3.919 a pound.

Auto sales are strong -- just not strong enough
Autodata, a market research firm that tracks auto sales, estimated the seasonally adjusted annual sales rate for March at 14.4 million units, up from a 13.1-million rate in March 2011 and a 15.1-million unit rate in February.

Reuters had forecast a sales rate of 14.75 million units. But the odds seem to favor a rate of 14.5 million units or lower.

Ford Motor (F) added 2 cents to $12.64 as the sales rose 5.1% last month, its strongest March sales in five years. Chrysler Group, majority owned by Fiat (FIATY), reported its best quarter in four years. U.S. vehicle sales rose 34% in March from a year earlier.

While GM's sales gain was a disappointment, the company did sell more than 100,000 vehicles, led by small and compact cars.

Toyota (TM) sales were up 15.4% with sales topping 200,000 units for the first time since 2008. Still, analysts had expected a 22.1% gain.

Nissan (NSANY) sales were up 12.5% from a year ago. Volkswagen (VLKAY) sales were up 34% from a year ago.

Separately, the Commerce Department said factory orders rose 1.3% in February, less than the 1.5% economists had predicted. In January, factory orders decreased by 1%.

There was rising demand for machinery, computers and aircraft, Dow Jones Newswires reported. January orders were revised to a 1.1% loss, from a previously reported 1.0% fall, the Commerce Department said Tuesday.

Winners are in short supply
McDonald's (MCD) and American Express (AXP)  were the top performers among the 30 Dow stocks, up $1.04 to $99.40 and 58 cents to $58.39, respectively. Only four Dow stocks were higher.

Bank of America (BAC) and Hewlett-Packard (HPQ) were the laggards, down 19 cents to $9.49 and 43 cents to $23.45, respectively.

Meanwhile, 148 S&P 500 stocks were higher, led by Express Scripts (ESRX), up $1.34 to $57.67, and Priceline.com (PCLN), up $23.65 to $743.62.

The laggards were First Solar (FSLR), down $1.93 to $22.60, and supermarket operator Supervalu (SVU), down 36 cents to $5.30.

Lastly, only 36 Nasdaq-100 stocks showed gains, led by Express Scripts and Priceline.com. Apple was the sixth-best performer.

Research In Motion was the Nasdaq-100 laggard, followed by First Solar.

Short hits from the markets -- New York close
			Tues.			Mon.			Month chg.			YTD chg.
Treasury yields
13-week Treasury bill			0.0700%			0.060%			0.00%			600.00%
5-year Treasury note			1.105%			1.021%			5.94%			33.13%
10-year Treasury note			2.284%			2.193%			3.07%			22.07%
30-year Treasury bond			3.410%			3.338%			1.94%			18.03%
Currencies
U.S. Dollar Index			79.641			78.963			0.64%			-1.09%
British pound			1.5918			1.6028			-0.57%			2.45%
(in U.S. $)
U.S. $ in pounds			£0.628			£0.624			0.57%			-2.39%
Euro in dollars			$1.32			$1.33			-0.79%			2.17%
(in U.S. $)
U.S. $ in euros			€ 0.755			€ 0.751			0.80%			-2.12%
U.S. $ in yen			83.06			82.10			0.08%			7.72%
U.S. $ in Chinese			6.32			6.29			-0.01%			-0.09%
yuan
Canada dollar			$1.010			$1.010			0.75%			2.93%
(in U.S. $)
U.S. dollar			$0.991			$0.990			-0.74%			-2.85%
(in Canadian $)
Commodities
Gold (-GC)			$1,672.00			$1,679.70			0.01%			6.71%
(per troy ounce)
Copper (-HG)			$3.919			$3.921			2.46%			14.06%
(per pound)
Silver (-SI)			$33.2650			$33.0980			2.40%			19.17%
(per troy ounce)
Wheat (-ZW)			$6.5800			$6.5700			-0.42%			0.80%
(per bushel)
Corn (-ZC)			$6.5825			$6.550			2.21%			1.82%
(per bushel)
Cotton			$0.9270			0.9357			-1.30%			1.11%
(per pound)
Coffee			$1.8805			1.8885			1.65%			-18.11%
(per pound)
Crude oil (-CL)			$104.01			$105.23			0.96%			5.24%
(per barrel)