Updated from 7:34 p.m. ET to add commentary on housing starts

.

NEW YORK (

TheStreet

) -- Welcome to the downside of an improving economy.

The minutes of the

Federal Open Market Committee's

latest policy meeting on Jan. 24-25 seemed to

spook investors a bit

Wednesday afternoon, revealing a goodly amount of division about whether another round of quantitative easing is really justifiable.

"A few members observed that, in their judgment, current and prospective economic conditions --including elevated unemployment and inflation at or below the Committee's objective -- could warrant the initiation of additional securities purchases before long," the

minutes

read. "Other members indicated that such policy action could become necessary if the economy lost momentum or if inflation seemed likely to remain below its mandate-consistent rate of 2 percent over the medium run."

It's those "other members" that shook the market as one widely held assumption of the risk-on paradise that equities have enjoyed in 2012 has been that QE3 would likely arrive in the first half of the year. Now that's in doubt, putting the

up, up and away

good feelings at some risk. Right on time, the

VIX

spiked to 8% to close above 20 for just the second time since Jan. 18.

The takeaway for Paul Ashworth, chief U.S. economist at

Capital Economics

, was that "the Fed is unlikely to launch a third round of quantitative easing unless the economic outlook deteriorates."

He continued: "Given that the incoming economic data since that meeting has only been more positive - with employment, auto sales, underlying retail sales and manufacturing output all posting strong gains in January - there is now little chance of the Fed launching another round of large-scale asset purchases at the FOMC meetings in either March or April."

Not to worry, though, the continued turbulence in Greece and the rest of the old continent could still trigger another round of bond buying by the central bank, Ashworth said.

"If we are right in believing that the euro-zone crisis will become even more severe later this year, then the negative impact on US GDP growth could easily be sufficient to trigger a QE3," he wrote. "For now, however, Fed officials seem content to wait and see how the US recovery develops on its own."

Also right on time, Richard Fisher, president of the Dallas Fed, reportedly called

QE3 a "fantasy" of Wall Street

in a speech on Wednesday, saying he thinks there's almost no chance of it occurring.

Nothing happens in a vacuum, of course, and the headlines from Greece also stoked Wednesday's selloff, which was the

Dow Jones Industrial Average's

poorest performance of the year.

But longer-term, the chance that QE3 may not come to pass, is a significant shift. Some of this rally has been predicated on the belief that the Fed would step in at some point. Without another dose of easing, the picture changes and investors may find out that Wall Street's fantasy doesn't mix well with their reality.

In keeping with the Fed theme, Scott Wren, senior equity strategist at Wells Fargo, voiced the idea on Wednesday that lower interest rates aren't going to be very stimulative this around.

"The Fed seems to be 'pushing on a string' for lack of a better term," wrote Wren. "In our opinion, the high level of personal debt is keeping many consumers from boosting their purchases in response to lower interest rates. Our bet is that, despite the doves keeping interest rates low for an extended period, the economy will grow at a slower pace largely due to the debt overhang. The stock market can make upward progress over time in a modest-growth environment, but we believe the market will be trading near current levels at the end of this year."

If the Fed's policy weapons have indeed become blunted by overuse, stocks stand to lose more than a little of their current luster.

Another factor in Wednesday's weakness was a sharp midday decline in

Apple

(AAPL) - Get Report

. The stock finished off 2.3% at $497.67, backing way off a new all-time high of $526.29 set earlier in the session.

The drop was attributed to chatter that Apple's weighting in the Nasdaq 100 might be adjusted but the dramatic shift was also a function of how far the stock had run in such a short time. At Wednesday's new all-time high, the shares had jumped 15.6% from their close at $455.12 on Feb. 2, rising in eight consecutive sessions across that span.

In other words, as great a stock as Apple may be, it was getting ahead of itself, getting rewarding for the chance of a dividend, not an actual announcement. And while the sentiment around the stock couldn't really get much more positive, the fact that Tim Cook seems to be Wall Street-friendly is yet another long-term positive.

Check out TheStreet's quote page for Apple for year-to-date share performance, analyst ratings, earnings estimates and much more.

Moving on to Thursday's scheduled news,

Directv Group

(DTV)

is reporting its fiscal fourth-quarter results before the opening bell, and the average estimate of analysts polled by

Thomson Reuters

is for earnings of 92 cents a share in the December-ended period on revenue of $7.4 billion.

The stock is up 7.4% so far in 2012, but based on Wednesday's regular-session close at $46.30, it's still 13.3% below a 52-week high of $53.40 set back on July 13. At current levels, the forward price-to-earnings multiple sits at an attractive 10.6X, but the shares don't pay a dividend as yet.

Sell-side sentiment is mildly bearish with 13 of the 24 analysts covering Directv at hold (11) or underperform (2), and remainder split between strong buy (3) and buy (8). The median 12-month price target sits at $54, implying potential upside of 16.6%.

Directv fell short of the consensus view last time around, and Credit Suisse, which has a neutral rating and a $53 price target on the stock, is waiting to hear more about how the company plans to manage its U.S. customer base going forward.

The firm lowered its estimate of U.S. subscriber net additions in the fourth quarter to 189,000 from $274,000 on Tuesday, citing expectations for lower gross additions and slightly higher churn.

Credit Suisse said Directv is focusing more on subscriber retention than additions as it faces more competition from the likes of

DISH Network

(DISH) - Get Report

and others. The firm is a penny above consensus, looking for a profit of 93 cents a share.

"We have also trimmed our longer term net adds estimates for DTV US as the company increasingly focuses on retaining US subs vs. acquiring new ones," Credit Suisse wrote. "The change to DTV's US customer mgmt. strategy has been precipitated by several factors incl. (1) the maturity of the pay TV category (virtually zero growth in '11), (2) the increasingly competitive mkt for new video subs (from telcos, DISH & cable), (3) the pace at which DTV's US prog. expenses continue to grow (i.e. high single digits, 8%+)."

Check out TheStreet's quote page for Directv for year-to-date share performance, analyst ratings, earnings estimates and much more.

General Motors

(GM) - Get Report

also opens its books before the opening bell, and Wall Street is looking for earnings of 41 cents a share on revenue of $38.21 billion.

The stock has been a big participant in 2012's rally, advancing more than 24% to close at $24.93. The sell side is very bullish on the stock with 18 of the 21 analysts covering GM at strong buy (6) or buy (12), and the 12-month median price target at $32, implying potential upside of 28%.

One reason that analysts like GM is its considerable cash hoard, which totaled $28 billion as of Sept. 30, roughly $16 per share. Sterne Agee initiated coverage of the company in late December with a buy rating and a $36 price target, and it's expecting the cash balance swelled to $29.3 billion at year's end.

"GM's balance sheet should allow the company to address its underfunded pension, continue to invest in its global product strategy and provide underlying support for the stock," the firm said at the time.

Check out TheStreet's quote page for General Motors for year-to-date share performance, analyst ratings, earnings estimates and much more.

Other companies reporting before Thursday's opening bell include

Apache Corp.

(APA) - Get Report

,

Barrick Gold

(ABX)

,

BioCryst Pharmaceuticals

(BCRX) - Get Report

,

Build-A-Bear Workshop

(BBW) - Get Report

,

Cabelas

(CAB)

,

Duke Energy

(DUK) - Get Report

,

EDGAR Online

(EDGR)

,

GNC Holdings

(GNC) - Get Report

,

J.M. Smucker

(SJM) - Get Report

,

Life Time Fitness

(LTM) - Get Report

,

Molson Coors Holdings

(TAP) - Get Report

,

Orbitz Worldwide

(OWW)

,

PF Chang's China Bistro

(PFCB)

,

PG&E Corp.

(PCG) - Get Report

,

Progress Energy

(PGN)

,

Realogy

(H) - Get Report

,

Red Robin Gourmet Burgers

(RRGB) - Get Report

,

Reliance Steel

(RS) - Get Report

,

SkyWest

(SKYW) - Get Report

,

Spirit Airlines

(SAVE) - Get Report

,

Sycamore Networks

(SCMR)

,

Ultralife

(ULBI) - Get Report

,

VF Corp.

(VFC) - Get Report

, and

Waste Management

(WM) - Get Report

.

The late show features

Allscripts Healthcare

(MDRX) - Get Report

,

Applied Materials

(AMAT) - Get Report

,

Aruba Networks

(ARUN)

,

Blue Coat Systems

(BCSI)

,

CapitalSource

(CSE)

,

Cray

(CRAY) - Get Report

,

Demand Media

(DMD)

,

Dole Food

(DOLE)

,

Key Energy Services

(KEG) - Get Report

,

Local.com

(LOCM)

,

Nordstrom

(JWN) - Get Report

,

Revlon

(REV) - Get Report

,

Rovi Corp.

(ROVI)

,

SonoSite

(SONO) - Get Report

, and

VCA Antech

(WOOF)

.

Baidu.com

(BIDU) - Get Report

is set to report its fourth-quarter results after the close, and investors are anxiously awaiting the numbers after the company delayed its report earlier this month. The stock is still up nearly 21% so far in 2012 based on Wednesday's close at $138.32 but it hasn't quite clawed back to the levels seen last summer when it peaked at $165.96 in late July.

The average analysts' estimate is for a profit of 89 cents a share from the Chinese Internet search provider in the December-ended quarter with the 14 estimates ranging from a low of 86 cents to a high of 97 cents. At current levels, the stock is trading at a forward price-to-earnings multiple of 30.5X, not bad if it can continue to deliver topline growth along the lines of the 85% year-over-year jump to $654.7 million in the third quarter.

Check out TheStreet's quote page for Baidu.com for year-to-date share performance, analyst ratings, earnings estimates and much more.

Thursday is a fairly big day for economic data. Crossing the wires will be weekly initial and continuing jobless claims at 8:30 a.m. ET; housing starts and building permits for January at 8:30 a.m. ET; the producer price index for January at 8:30 a.m. ET; and the Philadelphia Fed regional manufacturing activity survey for February at 10 a.m. ET.

The consensus view is for initial jobless claims to rise to 365,000 from 358,000 last week, and Ian Shepherdson, chief U.S. economist at

High Frequency Economics

, is looking even higher than that, estimating a spike up to 380,000. But he still thinks the long-term improving trend is in place, viewing the rise as noise more than anything else.

"If we're right, claims will rise to the top of the recent downward channel, and the four-week moving average will rise by 6K," he wrote. "In macro terms, this means nothing, but markets are paying close attention to claims, and a big rebound this week would inevitably spark chatter to the effect that the improvement in the labor market is stalling.

We think that is very unlikely

."

Hopes are high for housing starts and building permits numbers after a very strong National Association of Home Builders confidence survey, which came in at 29 for February, its fifth straight monthly increase. Shepherdson had some concern about a correction in the report but "Instead, the index powered to its highest level since May 2007, and is now consistent with new home sales rising to at least 450K; a longer-run correlation points to a number closer to 600K."

The consensus estimate is for housing starts of 671,000 and building permits of 675,000, but Shepherdson is setting his sights higher, estimating starts at 700,000 and permits at 710,000.

"After the modest dips in starts and permits in December -- all in the hyper-volatile multi-family sector -- consensus forecasts for January look low to us; we expect a decent rebound, with both numbers reaching post-Lehman highs," he wrote.

And finally,

NetApp

(NTAP) - Get Report

was surging in the

after-hours session

after reporting in-line quarterly results and delivering a solid outlook, while

Blue Nile

(NILE)

shares dropped more than 20% after the diamond and luxury jewelry retailer missed badly in its fourth quarter and gave a weak outlook.

--

Written by Michael Baron in New York.

>To contact the writer of this article, click here:

Michael Baron

.

Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.