NEW YORK ( TheStreet) -- Major U.S. stock averages dipped Thursday following a downtrodden tone from the latest minutes of the Federal Open Market Committee, the policy-making wing of the Federal Reserve. The surprise news outweighed stronger-than-expected employment data for December and a number of upbeat monthly retail-sales reports.

Stock action was more subdued as equities traded in the red for much of the morning, in contrast to the big surge in stocks the previous session. Investors on Thursday booked profits amid worries that U.S. lawmakers' last-minute budget agreement falls short of dealing with the country's deficit.

The FOMC minutes said that its staff "reported on potential risks to financial stability, including those associated with a disorderly resolution of the so-called fiscal cliff, a delayed increase in the federal debt ceiling, or a future deterioration of financial conditions in Europe."

The Dow Jones Industrial Average was off 21 points, or 0.2%, at 13,391.

Breadth was negative, with losers beating winners by 18 to 12. Decliners included UnitedHealth ( UNH), DuPont ( DD), General Electric ( GE) and Microsoft ( MSFT).

Advancers in the Dow included Hewlett-Packard ( HPQ), Alcoa ( AA), Caterpillar ( CAT) and Merck ( MRK).

The S&P 500 fell 3 points, or 0.2%, to 1,459. The tech-heavy Nasdaq lost 12 points, or 0.4%, at 3,101.

Sectors traded mixed in the broad market. Conglomerates, consumer non-cyclicals, basic materials, technology, services, utilities and financials were edging lower, while energy, consumer cyclicals, transportation, health care and capital goods were in the green.

Volumes were at 3.77 billion shares at the New York Stock Exchange and 1.75 billion shares on the Nasdaq. Advancers were edging decliners narrowly by a ratio of 1.3-to-1 on the Big Board, but losers beat winners 1.1-to-1 on the Nasdaq.

Sentiment among the FOMC members was split, which was a notable point that hit investors.

The minutes revealed: "In considering the outlook for the labor market and the broader economy, a few members expressed the view that ongoing asset purchases would likely be warranted until about the end of 2013, while a few others emphasized the need for considerable policy accommodation but did not state a specific time frame or total for purchases. Several others thought that it would probably be appropriate to slow or to stop purchases well before the end of 2013."

One of the next major deadlines is the few weeks that Congress has left before it must raise the debt ceiling to avert a government default on bills and financial obligations. This means the Obama administration and Congress must tackle the sequestration issue that was pushed back for two months in the "fiscal cliff" deal.

Julia Coronado, chief North American economist at BNP Paribas, said the "two parties are yet again starting miles apart" on this issue, with Republicans having already indicated that they believe the tax side of fiscal policy has been addressed for now and their focus will be on spending.

The Democrats have indicated they will continue to demand a balanced approach with more tax increases for any agreed-to cuts in spending.

"Given the track record of the current Washington crew, we can be sure we will go right to the brink and flirt with default before we reach yet another piecemeal accord," said Coronado. "As in 2011, the battle over the debt ceiling will likely end with a downgrade of the U.S., this time from Fitch and Moody's sometime in Q2."

Major U.S. stock averages roared Wednesday, with the Dow soaring more than 300 points, as global risk appetite surged on the first trading day of the year after the House managed to pass the Senate's 11th-hour agreement on averting the fiscal cliff.

The International Monetary Fund said Wednesday that while it welcomes the actions by the U.S. Congress to avoid sudden tax increases and spending cuts, more needs to be done to put U.S. public finances back on a sustainable path without harming the still-fragile recovery. Specifically, a comprehensive plan that ensures both higher revenue and containment of entitlement spending over the medium term should be approved as soon as possible, the IMF said.

The IMF also said it is crucial that the U.S. is able to raise the debt ceiling "expeditiously" and remove remaining uncertainties about the spending sequester and expiring appropriation bills.

Better-than-anticipated employment data were released Thursday, pointing to upside risks to Friday's key government nonfarm payrolls report. Payroll processor ADP said that 215,000 jobs were added in December, compared with an upwardly revised 148,000 the prior month. Economists, on average, expected ADP to report a gain of 133,000 jobs in December.

"Private sector employment held up remarkably well in December, despite concerns over the fiscal cliff and the tax increases related to the Affordable Care Act," said Dan Greenhaus, chief global strategist at BTIG.

Greenhaus noted that in the December report, and since 2010, small businesses have been trailing large business in adding jobs perhaps in connection to the impact of the health-care law, increased regulation and credit availability. "The lack of meaningful gains among this category (small business) partially speaks to why job growth has been relatively anemic."

The Labor Department reported that initial jobless claims for the week ended Dec. 29 increased by 10,000 to 372,000 from the prior week's upwardly revised 362,000.

"We have to be careful not to read too much into year-end/turn-of-the-year claims data because of volatility associated with shifting holidays and seasonality that is not necessarily adequately adjusted for by the usual statistical procedures," said John Ryding and Conrad DeQuadros, the founders of research firm RDQ Economics.

Gold for February delivery declined Thursday by $14.20 to settle at $1,674.60 an ounce at the Comex division of the New York Mercantile Exchange, while February crude oil contracts fell 21 cents at $93.34 a barrel.

The benchmark 10-year Treasury plummeted 19/32 to raise the yield to 1.906%. The dollar jumped 0.73%, according to the U.S. dollar index.

In corporate news, December same-store sales from retailers were mixed as consumers stayed cautious during the key holiday shopping season due to economic uncertainties.

TJX ( TJX) rose 3.3% and Ross Stores ( ROST) jumped 8% after their December sales beat expectations. Limited Brands ( LTD) was off 5.7% after the specialty retailer posted weaker-than-expected sales.

Costco Wholesale ( COST) reported a December same-store sales increase of 9%, beating the consensus estimate of 6.5%. Shares rose 1%.

Meanwhile, Family Dollar Stores ( FDO) reported fiscal first-quarter earnings of 69 cents a share, missing the average analyst estimate of 75 cents. Revenue was in line with forecasts amid what the company said was a challenging holiday shopping season. Shares tumbled 13%.

Hormel Foods ( HRL) said it was buying Unilever's ( UL) Skippy peanut butter business for about $700 million.

Hormel shares popped 3.7%, and Unilever American Depositary Receipts slipped 0.82%.

Mellanox Technologies ( MLNX) on Wednesday reduced its revenue forecast for the fourth quarter. The data-storage company said it expects fourth-quarter revenue in a range of $119 million to $121 million, down from previous guidance of $145 million to $150 million. Shares sank 17.1%.

Quiksilver ( ZQK) co-founder Robert McKnight Jr. reportedly will step down from his CEO post, effective Jan. 11. He has been with the surfing outfitter since 1991.

Former Walt Disney executive Andy Mooney will take over as CEO, according to The Wall Street Journal. Shares tacked on 3.4%.

Biogen Idec ( BIIB) shares tumbled 1.4% after the biotech company said its experimental ALS drug failed to meet its primary endpoint and that it will discontinue development of the treatment.

Buffalo Wild Wings ( BWLD) shares were up 3.8% as Steven Cohen's SAC Capital disclosed a 5% stake in the company.

-- Written by Andrea Tse and Joe Deaux in New York.

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

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