The Dow Jones Industrial Average fell 21 points, or 0.2%, to 14915 in afternoon trading. The Standard & Poor's 500-stock index shed eight points, or 0.5%, to 1523, stepping back from its highest closing level since October 2007, hit Tuesday.
The Nasdaq Composite Index lost 23 points, or 0.7%, to 3191. Materials stocks on the S&P 500, such as Alcoa, fell most sharply.
Caterpillar was among the worst-performing stock on the Dow, after the heavy-machinery maker's rolling three-month sales numbers in January fell 4% from the month earlier, and were down 11% from a year ago.
In other corporate news, Apple fell 1.5% after Foxconn Technology Group, which assembles consumer electronics for a broad range of customers including Apple, said it was freezing hiring of assembly-line workers in China.
Shares of Office Depot and OfficeMax each dropped, cutting in to strong gains for each of them Tuesday. Office Depot said Wednesday it agreed to buy OfficeMax in an all-stock deal that values the rival office-supplies retailer at roughly $1.19 billion.
Under the companies' definitive agreement, Office Depot will issue 2.69 new shares for each OfficeMax share outstanding. Minutes from the Federal Open Market Committee's Jan. 29-30 policy meeting showed that officials worried the central bank's easy-money policies could lead to instability in financial markets and might be hard to pull back in the future.
Fed officials at the January meeting deemed the larger economic picture still troubling and decided to keep purchasing $85 billion a month of mortgage-backed and Treasury securities, programs aimed at boosting investment and hiring.
On the economic front, new residential construction dropped more than expected in January from the month earlier, although December's construction figure was revised upward, the Commerce Department said.
Meanwhile, the number of new building permits rose last month to the highest level since June 2008. In other economic data, wholesale prices rose by 0.5% in January, more than expected. Excluding food and energy costs, which tend to be volatile, prices rose 0.2%, in line with expectations, according to the Labor Department.
EUROPEAN STOCK MARKETS
European stock markets were mostly lower Wednesday, although U.K. stocks gained as hope mounted for more monetary-policy easing by the Bank of England.
The Stoxx Europe 600 index fell 0.3% to close at 289.07, retreating after a 1.1% rally on Tuesday, while London's FTSE 100 jumped above 6400 for the first time since January 2008, slipping back to close 0.3% higher at 6395.37. It was the highest closing value since Jan. 3, 2008.
At a Bank of England meeting this month, three out of nine policy makers voted in favor of increasing the central bank's asset-purchase program by GBP25 billion, the minutes showed.
In January, only one member voted in favor of more easing. Weaker-than-expected figures on consumer confidence in the euro zone weighed on markets elsewhere in Europe. France's CAC 40 index lost 0.7% to 3709.88, while Germany's DAX 30 index fell 0.3% to 7728.90.
Resources stocks fell in response to a slide in precious-metal prices. Shares of platinum miner Anglo American fell 2.2%, while shares of Kazakhmys, which produces copper and gold, fell 3.6%.
Royal KPN slumped 9.7% as the Dutch telecom firm said its largest shareholder, Mexico's America Movil, has agreed to back a planned capital increase of EUR4 billion. Shares of Akzo Nobel declined 5.3%.
The Dutch paint-and-coatings firm said it had outlined new financial targets for 2015 after posting a net loss for the fourth quarter. Swedish Match AB slid 6.8% after the company said operating profit from the snus and snuff business will be lower in 2013 compared with 2012 because of increased investments in the U.S. and competition in Sweden.
Credit Agricole increased 3.9% despite posting a steep fourth-quarter loss, hurt by write-downs on its investment bank and its Italian unit. The write-downs were expected. In London, shares in RSA Insurance tumbled 14% after the company announced a 33% dividend reduction its full-year results for 2012.
Asian markets were higher Wednesday, with the Nikkei in Japan briefly breaching the 11,500 mark for the first time since September 2008, while stocks in South Korea had their best day since September.
Overnight cues were broadly positive for Asia, helping stocks start the session on an upbeat note. The region's best performer was South Korea's Kospi, which ended up 2% at 2024.64 the market's largest percentage gain since early September.
The move puts one of Asia's worst performing markets in 2013 back into positive territory for the year, erasing some of the losses brought about by strength in the local currency that has hindered Korean exporters.
Some of the Kospi's largest constituents benefitted from the rise in the broader market: Samsung Electronics was up 3.6% and Hyundai Motor jumped 3.1%.
The yen strengthened against the U.S. dollar, after Japanese Prime Minister Shinzo Abe said that there was less need for the government and the private sector to set up a fund to invest in foreign bonds.
Currency traders had hoped that such a fund would contribute to further weakness in the yen. Stocks in Japan managed to rise despite the firmness in the yen, with the Nikkei up 0.8% at 11468.28, after Yomiuri Shimbun reported Wednesday that a list of prospective candidates for the governorship of the Bank of Japan has been narrowed to just four candidates excluding Toshiro Muto, a figure seen as less dovish than the other candidates.
Large exporters posted strong gains: Toyota Motor Corp. added 1.7% and Canon was 1.5% higher. Also in Tokyo, financial-services and leasing company Orix Corp advanced 2.4% after it agreed to buy Dutch asset manager Robeco from Rabobank for around EUR1.9 billion, the Japanese company's largest ever acquisition.
Hong Kong's Hang Seng Index was up 0.7%, with Chinese financial stocks leading the gainers. Bank of China rose 2.2% and China Construction Bank added 1.7%. HSBC Holdings, the market's single largest constituent, closed 0.1% lower after the bank announced it would sell its banking unit in Panama to Bancolombia S.A. for $2.1 billion.
In mainland China, the Shanghai Composite Index closed 0.6% higher at 2397.18 as investors bought on dips after a two-session sell-off, with property developers posting the most gains. China Merchants Property Development rose 3.3% and China Vanke added 2.1%.
Base metals on the London Metal Exchange closed mostly lower after the group pared overnight gains early in the session, with a lower euro weighing on prices toward the close.
At the close of open-outcry trading, LME three-month copper was 1.1% lower on the day at $7,960 a metric ton, falling below the psychological $8,000/ton level.
Nickel once again led declines in a bearish week for the metal, closing 1.2% lower at $17,165/ton. U.S. crude futures settled lower Wednesday after a sharp bout of midmorning selling that also pulled down gasoline prices.
Light, sweet crude for March delivery settled $2.20, or 2.3%, lower at $94.46 a barrel on the New York Mercantile Exchange. The March futures contract expired at settlement, and the more actively traded April futures settled $1.88, or 1.9%, lower at $95.22 a barrel.
Gold futures extended their decline in electronic trading after the minutes from the Federal Reserve's January meeting showed that officials will consider major changes to its quantitative easing program at the next meeting in March.
April gold traded at $1,571.90 an ounce in electronic trading on Globex, down more than $6 after settling at $1,578 an ounce on the Comex division of the New York Mercantile Exchange, the lowest close since July 24 and down $26.20, or 1.6%, from the previous settlement. Compiled from MORRISON SECURITIES PTY. LTD.
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