Wall Street closes lower after Fed minutes, inflation data

NEW YORK, April 12 (Reuters) – U.S. stocks fell on Wednesday after minutes of the Federal Reserve’s March policy meeting raised concerns among many members of the Federal Open Market Committee (FOMC) about a regional bank liquidity crisis.

The minutes followed a cooler-than-expected inflation report that belied sticky underlying data and confirmed the prospect of another policy rate hike when the central bank meets next month.

All three major US stock indices ended in negative territory throughout the session.

“The minutes make it clear that the Fed continues to be concerned about the banking crisis and rising prices,” said Greg Bassuk, CEO of AXS Investments in New York.

Indices began to gyrate as market participants dissected the labor sector’s Consumer Price Index (CPI).

The report said prices paid by urban consumers for a basket of goods and services came in below analysts’ expectations, suggesting the central bank’s efforts to control inflation are taking effect.

However, core CPI – which strips out volatile food and energy items – hit the consensus bull’s eye, and is above the central bank’s average annual rate target of 2%.

“This week is an inflection point as investors look for firm footing ahead of tomorrow’s release of the corporate earnings and PPI (producer prices) report,” Bassuk said.

“(Economic) data is very mixed, so investors are overreacting to any positive or negative indication of Fed rate hike policy. Volatility will continue, and investors should fasten their seat belts. There’s a lot of uncertainty going on right now for both Wall Street and Main Street.”

At last glance, financial markets have a 70% chance of another 25 basis point interest rate hike at the end of the FOMC’s policy meeting next month.

The next market-moving catalyst is likely to be the first-quarter earnings season, with results from three big banks on Friday — Citigroup Inc ( CN ), JPMorgan Chase & Co ( JPM.N ) and Wells Fargo & Co ( WFC ).N).

Analysts now expect total first-quarter S&P 500 earnings to fall 5.2% year-over-year, a sharp reversal from the 1.4% annual growth seen at the start of the quarter.

The Dow Jones Industrial Average (.DJI) fell 38.29 points, or 0.11%, to 33,646.5; The S&P 500 (.SPX) lost 16.99 points, or 0.41%, to 4,091.95; And the Nasdaq Composite (.IXIC) was down 102.54 points, or 0.85%, at 11,929.34.

Seven of the S&P 500’s 11 major sectors ended in negative territory, with consumer discretionary ( .SPLRCD ) suffering the biggest percentage loss. Industrials (.spLRCI) gained.

American Airlines Group Inc ( AAL.O ) fell 9.2% after it forecast lower-than-expected first-quarter profit.

Declining issues outnumbered advancers by a 1.08-to-1 ratio on the NYSE; On the Nasdaq, a 1.69-to-1 ratio favored decliners.

S&P 500 hits 12 new 52-week highs and two new lows; The Nasdaq Composite posted 64 new highs and 187 new lows.

There were 10.40 billion shares on US exchanges, compared to the 11.78 billion average over the last 20 trading days.

Reporting by Stephen Culp; Additional reporting by Sruthi Shankar, Angika Biswas and Richard Chang in Bangalore

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