U.S. stocks fell, Wednesday, reversing an early rally amid rising concern that the Federal Reserve may soon scale back its stimulus efforts if the labor market continues to improve. All 10 sectors in the S&P 500 ended in the red, with healthcare stocks finally giving in to the broad-based selloff and falling into negative territory. Utilities, materials and energy stocks posted the steepest declines. Most commodities also lost ground on speculation the central bank will stop adding liquidity to the economy, reducing their appeal as a hedge against future inflation.
U.S. stocks rallied early in the day, with the Dow rising as much as 150 points, after Fed Chairman Ben Bernanke said in his prepared remarks to Congress a premature withdrawal of quantitative easing would put the economic recovery at risk. But shares later turned south after he said in response to a question the central bank could "step down" its pace of asset purchases during the next few meetings of the Federal Open Market Committee if the labor market continues to improve and "we have confidence that that is going to be sustained."
The decline accelerated in late trade following the 2 p.m. release of minutes from the last FOMC meeting showed that, "a number of participants expressed willingness" to start tapering its quantative easing as early as its June 18-19 meeting -- far earlier than many market participants currently expect.
Commodities were mostly lower. Crude oil for June delivery (CLM13.NYM) settled $1.90 lower at $94.28 per barrel while June natural gas (NGM13.NYM) slid a penny, finishing at $4.19 per 1 mln BTU. June gold fell $10.20 to $1,367.60 per ounce while July added 2 cents to settle at $22.46 per ounce. July copper climbed 4 cents to finish at $3.37 per pound.
Here's Where The U.S. Markets Stood At Day's End
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