Fears over Fed’s next move hits Wall Street

THE Dow slipped and the S&P 500 edged up less than a point yesterday, interrupting a four-day rally, with investors trying to gauge when the Federal Reserve may scale back on its economic stimulus.

Minutes from the Federal Reserve’s June policy meeting released yesterday afternoon showed many officials wanted more reassurance that the labor market was improving before reining in stimulus measures. Even so, consensus built within the Fed about the likely need to begin pulling back soon.

The three major US stock indexes recovered some ground immediately following the release of the minutes. But the gains were short-lived.

The Dow closed slightly lower to break a four-day winning streak, while the broader S&P 500 eked out a tiny gain.

Fed chairman Ben Bernanke spooked investors last month when he said the economy’s expansion was strong enough for the central bank to start slowing the pace of its bond purchases later this year.

Some in the market have pegged September as when the Fed could pull back. “The minutes are more consistent with the messages we’ve been getting since the Fed meeting, which is that we should expect this to occur slowly and it may not happen in September,” said Kate Warne, investment strategist at Edward Jones.

The Dow Jones industrial average dipped 8.68 points, or 0.06 per cent, to end at 15,291.66. The Standard & Poor’s 500 Index inched up just 0.30 of a point, or 0.02 per cent, to finish at 1,652.62. The Nasdaq Composite Index gained 16.50 points, or 0.47 per cent, to 3,520.76.