Stocks turn lower as Fed leaves door open to June rate hike

Trader George Ettinger, right, works on the floor of the New York Stock Exchange, Wednesday, May 18, 2016. U.S. stocks are falling in morning trading. (AP Photo/Richard Drew)

NEW YORK (AP) — Stocks slipped into losses Wednesday after minutes from the Federal Reserve’s last meeting suggested that policymakers may raise interest rates next month if the economy continues to improve. Bond yields rose, sending bank stocks even higher, while utilities and other high-dividend stocks fell. Retailers dropped after Target reported weak sales.

KEEPING SCORE: The Dow Jones industrial average slipped 45 points, or 0.3 percent, to 17,485 at 2:16 p.m. Eastern time. The Standard & Poor’s 500 index fell five points, or 0.2 percent, to 2,043. The Nasdaq composite gained eight points, or 0.2 percent, to 4,724.

HIGHER RATES? The Fed minutes of its meeting in April showed that there was a widely held view that it “likely would be appropriate” to raise rates at its June meeting as long as the economy and labor markets continue to strengthen and inflation shows signs of accelerating. Some investors are worried that a rise in rates will hurt a sluggish U.S. economy that grew just 0.5 percent in the first quarter.

THE QUOTE: “There is little room for error,” said Tom Cassidy, chief investment officer at Univest Wealth Management Division. “When you’re growing slowly, any hiccup could result in a recession.”

TARGET TUMBLE: Target plunged $5.45, or 7 percent, to $68.16 after reporting that earnings beat expectations but that sales had slowed. The company also gave a forecast that disappointed investors.

RETAILER ROUT: Shares of many other retailers followed Target lower in what is shaping up to be a miserable year for the sector. Wal-Mart dropped 3 percent and Costco Wholesale lost 1.6 percent.

BANK BOOST: JPMorgan Chase jumped 4 percent and Goldman Sachs climbed 2.6 percent, the two biggest gainers in the Dow index, as investors anticipate bigger profits on future loans. Higher interest rates tend to widen the gap between what banks pay depositors for their money and what they charge when they lend the money out.

LIFT AT LOWE’S: The home improvement chain Lowe’s rose $2.47, or 3.2 percent, to $78.54 on surging first-quarter profits and higher comparable-store sales. The company also raised its outlook for the year as it benefits from a strengthening U.S. housing market.

EUROPE’S DAY: Germany’s DAX and France’s CAX 40 each rose 0.5 percent. Britain’s FTSE 100 was unchanged.

ASIA’S DAY: Japan’s Nikkei 225 index was flat. Hong Kong’s Hang Seng lost 1.5 percent. South Korea’s Kospi lost 0.6 percent. Australia’s S&P/ASX 200 fell 0.7 percent.

ENERGY: U.S. crude oil rose 14 cents to $48.45 a barrel in New York, adding to a string of gains. Brent crude, used to price international oils, climbed 30 cents to $49.58 a barrel in London.

BONDS AND CURRENCIES: U.S. government bond prices fell sharply. The yield on the 10-year Treasury note rose to 1.84 percent from 1.71 percent late Tuesday, a large move. The dollar rose to 109.76 yen from 109.07 yen. The euro slipped to $1.1277 from $1.1317.

METALS: Precious and industrial metals futures closed broadly lower. Gold fell $2.50 to $1,274.40 an ounce, silver lost 12 cents to $17.13 an ounce and copper dropped 1 cent to $2.08 a pound.

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