Stocks Close Off Lows After Fed Minutes

NEW YORK (TheStreet) -- Stocks pared earlier losses but closed lower Tuesday after Federal Reserve minutes showed policymakers expect the economy to continue to mend.

The Dow Jones Industrial Average closed well off session lows, declining 17 points, or 0.2%, to 10,434, while the S&P 500 dipped about 1 point, or 0.1%, to 1106. The Nasdaq dropped 7 points, or 0.3%, to 2169.

In the afternoon, stocks began to brush off earlier declines after the release of minutes from a meeting of the Federal Reserve Open Market Committee. During the November meeting, Fed officials trimmed their unemployment forecasts for 2010 and 2011 and reiterated that the central bank wants to keep interest rates low for an extended period. The economic policymakers also boosted their forecasts for economic growth in 2010 to a range of 2.5% to 3.5%.

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Financials highlighted some of the heavier decliners on the day, as the KBW Bank Index and the NYSE Financial Index fell 0.7% and 0.9% each. JPMorgan Chase(JPM Quote), the Dow's largest percentage loss leader today, fell 80 cents, or 1.9%, to $42.48. Bank of America(BAC Quote) was also one of the top decliners on the Dow, losing 19 cents, or 1.2%, at $16.10.

In a sign of healthy demand for government debt, a record $42 billion in five-year Treasury notes were also sold at auction in the afternoon, with a yield at 2.175%. The bid-to-cover ratio at the auction came to 2.81, its highest since September 2007 and better than the 2.63 from the October five-year note sale.