Dow Falls for Fifth Straight Day
NEW YORK (TheStreet) -- Stocks extended their losing streak on Wednesday after the minutes of the most recent Federal Reserve policy meeting showed the central bank still has a pretty high bar for another round of quantitative easing.
The Dow Jones Industrial Average lost nearly 49 points, or 0.38%, to close at 12,604. The blue-chip index, which bounced 70 points off its session low of 12,534, has fallen for five consecutive days, surrendering 2.6% over that span.
The Fed minutes showed the members of the central bank's open market committee were still expecting "moderate" economic growth for the United States over the next few quarters at the June 19-20 meeting and said only a "few" believed additional stimulus would ultimately be required. The Fed extended its Operation Twist bond maturity program at the meeting.In order for QE3 to get additional support, the minutes indicated economic conditions would likely have to soften considerably. "Several others [FOMC members] noted that additional policy action could be warranted if the economic recovery were to lose momentum, if the downside risks to the forecast became sufficiently pronounced, or if inflation seemed likely to run persistently below the Committee's longer-run objective," the minutes said. "The Committee agreed that it was prepared to take further action as appropriate to promote a stronger economic recovery and sustained improvement in labor market conditions in a context of price stability." "The minutes from the two-day FOMC meeting that ended on 20th June reveal that US Fed officials are edging closer to launching a third round of large-scale asset purchases, but it won't become a reality unless the recovery loses even more momentum or a more severe flare up in the euro-zone crisis raises the already elevated downside risks," wrote Paul Ashworth, chief U.S. economist at Capital Economics. Within the Dow, 21 of the index's 30 components finished lower, led by Boeing (BA), Home Depot (HD), Microsoft (MSFT) and United Technologies (UTX). Blue-chip gainers included Bank of America (BAC), Exxon Mobil (XOM) and Hewlett-Packard (HPQ). Apple (AAPL) was a drag on the Nasdaq, falling $3.78, or 0.62%, at $604.43 after UBS initiated coverage the stock with a buy rating and a 12-month price target of $740. The firm said it believes the eventual release of the iPhone 5 will be another positive catalyst for the stock, but that there's also some potential earnings hiccups in the interim.
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