U.S. stocks closed mostly lower on Wednesday despite surprisingly dovish Fed minutes, amid apparent progress in the Greece-euro zone negotiations.
The Nasdaq held positive, about 100 points off the key 5,000 level, while the Dow Jones industrial average briefly turned positive before ending mildly lower above 18,000.
Exxon Mobil was the greatest laggard on the Dow, falling more than 2 percent following Tuesday news that Warren Buffett’s Berkshire Hathaway shed its $3.47 billion stake in the energy company. During midday trade, reports surfaced of a possible incident at an Exxon Mobile refinery in Torrance, Calif.
Crude fell $1.39 to settle at $52.14 a barrel. The energy sector closed down about 1.5 percent as the greatest laggard on the S&P 500, which traded a few points below the intraday high of 2,101 reached on Tuesday.
The Fed Open Market Committee January meeting minutes released on Wednesday showed that the Fed will likely push back an interest rate hike to at least the second half of this year.
“The markets are weighing soft economic data against a Fed that is not entering strengthening,” said Ben Garber, economist at Moody’s Analytics.
The Fed funds futures from CME Group showed only a 53 percent chance of a rate hike in September, down from 62 percent prior to the release of the minutes.
“The market expected the minutes to be a little hawkish (but) the Fed was a little more dovish,” said David O’Malley, CEO of Penn Mutual Asset Management. “It wasn’t a big surprise.”
“Here on out, probably going to be very data-driven on a rate hike increase,” O’Malley said. “News and economic data will drive their timing.”
The U.S. 10-year Treasury yield came off its highs to trade as low as 2.05 percent following the release of the Fed minutes.
US 10-Year Treasury Yield
“The market is definitely acting as if the Fed rate hike has been pushed back a bit,” said Collin Martin, senior research analyst for fixed income at Charles Schwab. The minutes showed “concern about the core level of inflation.”
“When (a rate hike) does come the pace and magnitude is going to be slow,” Martin said.
Stocks were little changed earlier following news that the European Central Bank approved a two-week extension of liquidity for Greek banks, according to Dow Jones, citing a source.
“The Greece news is probably more important,” said Art Hogan, chief market strategist at Wunderlich Securities.
The news is “a step in the right direction and shows willingness of negotiation,” said Peter Cardillo, chief market economist at Rockwell Global Capital.
Treasury Secretary Lew spoke with Greek finance minister this morning, and urged the Greek Prime Minister to find constructive path forward with European Union and the International Monetary Fund, Reuters said. Greece will submit a request to the euro zone on Thursday to extend its loan program for up to six months.
“I think the Greece situation, everybody wants to keep it on the radar,” said JJ Kinahan, chief derivatives strategist at TD Ameritrade. “It’s going to be a day-to-day thing for the next few weeks. Unfortunately there’s no neat way to put an end to this situation.”
Stocks closed near highs on Tuesday on encouraging reports out of Greece, with the S&P 500 setting its second record for 2015 and the Dow Jones industrial average above 18,000. The Nasdaq was slightly off its dotcom bubble high of 5,048.62.
“I think we’re a bit ahead of ourselves and due for a sideways trade here,” said Terry Sandven, chief equity strategist at U.S. Bank Wealth Management.
Among several U.S. economic data points released on Wednesday, industrial production increased 0.2 percent in January, slightly below expectations.
The Labor Department said its producer price index for final demand dropped 0.8 percent, the biggest drop since the revamped series started in November 2009, after falling 0.2 percent in December. It was the third straight month of decline in the PPI.
U.S. housing starts fell in January as ground breaking for single-family projects slipped off a 6-1/2-year peak, but stayed at levels consistent with a gradually improving housing market.
Hilton Worldwide missed estimates by one cent with adjusted quarterly profit of 17 cents per share, though revenue was above estimates. Hilton’s revenue per available room in properties open at least a year rose less than expected, and the company is also projecting current quarter earnings below Street estimates.
Starwood Hotels said it will pay former CEO Frits Van Paasschen $7.2 million in severance, according to an SEC filing. He’ll also get a $312,500 consulting fee for helping Starwood find his replacement.
Actavis earned $3.91 per share for its latest quarter, beating estimates of $3.67. Revenue was also above estimates and the company also raised its full-year forecast on upbeat sales growth for its top selling products. The drug maker is also planning to take the Allergan corporate name when it completes acquisition of that company, pending shareholder approval.
Garmin earned an adjusted 77 cents per share for its latest quarter, one cent below estimates, though revenue beat consensus. The firm did say currency issues will slow revenue growth this year, but it will continue to invest in research and development.
The S&P 500 closed down 0.68 points, or 0.03 percent, at 2,099.66, with energy leading four sectors lower and utilities the greatest advancer.
The Nasdaq closed up 7.10 points, or 0.14 percent, at 4,906.36.
Advancers were a step ahead of decliners on the New York Stock Exchange, with an exchange volume of 721.9 million and a composite volume of 3.3 billion in the close.
High-frequency trading accounts for about 47.5 percent of trade volume this year, down from a peak of 61 percent in 2009, according to TABB Group estimates.
Gold futures recovered slightly to settle down $8.40 at $1,200.20 an ounce, after earlier falling below $1,200 an ounce for the first time since Jan. 5.
The U.S. dollar held mostly lower against major world currencies.
—Reuters and CNBC’s Peter Schacknow contributed to this report.
On tap this week:
Earnings: Fidelity National Financial, Fluor, Marathon Oil, Marriott
Lunar New Year
Earnings: Priceline, Wal-Mart, DirecTV, Discovery Comm., Goldcorp, Hormel Foods, Noble Energy, Con Edison, Intuit, Marvel Tech., Newmont Mining, Nordstrom
8:30 a.m.: Jobless Claims
9:45 a.m.: PMI Manufacturing Index Flash
10:00 a.m.: Philadelphia Fed Survey
10:00 a.m.: Leading indicators
10:30 a.m.: Natural gas inventories
11:00 a.m.: Oil inventories
4:30 p.m.: Fed Balance Sheet/Money Supply