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Stocks End Lower as Taper Talk Surfaces in Fed Minutes

Stocks end lower but cut earlier losses as some members of the Federal Reserve indicate they are open to discussing the scaling back of asset purchases 'at some point' if the economy improves rapidly.

Stocks finished lower Wednesday but cut losses late in the session after some members of the Federal Reserve indicated in the central bank's meeting minutes they were open to discussing the scaling back of asset purchases "at some point" if the economy improves rapidly.

The Dow Jones Industrial Average finished down 165 points, or 0.48%, to 33,896, the S&P 500 declined 0.29% and the Nasdaq fell 0.03%.

“A number of participants suggested that if the economy continued to make rapid progress toward the Committee’s goals, it might be appropriate at some point in upcoming meetings to begin discussing a plan for adjusting the pace of asset purchases,” said the minutes from the April 27-28 meeting of the Federal Open Market Committee.

“Various participants noted that it would likely be some time until the economy had made substantial further progress toward the Committee’s maximum-employment and price-stability goals,” the minutes added.

The Federal Reserve also said it remains convinced inflationary pressures will ease in the second half of the year even as a "number of participants" on the FOMC said consumer prices could remain elevated well into next year. 

Fed officials, following the lead of Chairman Jerome Powell, have largely been united in public comments with respect to their view that inflation - which is currently running at the fastest pace since 2009 - will slow in the later half of the year as base effects and supply chain bottlenecks ease and the economy returns to full capacity after the coronavirus pandemic. 

Treasury yields jumped to session highs of 1.692% following the release of the Fed minutes.

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Bitcoin prices rebounded to $39,666 after Tesla  (TSLA) - Get Tesla Inc. Report CEO Elon Musk indicated his electric vehicle company could hold its billion-dollar position in the world's biggest digital currency.

Musk, whose criticism of bitcoin's energy use, coupled with a suggestion Tesla could sell its $1.5 billion in holdings acquired earlier this year, helped - along with a renewed crackdown from China - tilt the digital currency into its biggest tailspin of the year this month, with prices falling below $30,000 briefly on Wednesday.

However, Musk tweeted Wednesday emojis of so-called diamond hands, images that are typically interpreted as indications of a "hold" strategy for key assets. 

Cryptocurrency exchange Coinbase Global  (COIN) - Get Coinbase Global Inc Report pared earlier lows but finished down 5.94%.

Bitcoin prices earlier Wednesday slumped to the lowest since January, while cryptocurrency peers such as Ethereum and Dogecoin traded heavily in the red, following the renewed crackdown on virtual currencies markets in China.

Bitcoin's decline was sparked by a post on the official WeChat account of the People's Bank of China which warned that digital tokens should not be used in either financial markets of the world's second-largest economy - and the largest crypto market - given that they are not "real currencies." 

Bitcoin has given up gains it made following Tesla's announcement on Feb. 8 that it had purchased $1.5 billion of the digital asset. Part of the reason was Elon Musk's surprise statement earlier this month that his company would no longer accept payments in Bitcoin

As for Tesla, shares fell 2.5% on Wednesday after a report said new registrations in China for its electric vehicles took a sharp downturn last month, raising concerns that the world’s biggest EV maker may be losing its grip in the world’s biggest market for battery-powered cars.