Traders work on the floor of the New York Stock Exchange October 23, 2014.BRENDAN MCDERMID/Reuters
U.S. stocks fell as declines in energy shares and speculation the Federal Reserve remains on course to raise borrowing costs this year overshadowed rallies in Apple Inc. and Boeing Co.
Energy companies slumped 3.5 percent as a group after oil retreated. Apple climbed 6.3 percent after reporting a record $18 billion in quarterly profit, one of the biggest in corporate history. Boeing Co. advanced 6.4 percent as it posted a quarterly profit that beat analysts' estimates.
The Standard & Poor's 500 Index fell 0.6 percent to 2,016.77 at 3:22 p.m. in New York. The Dow Jones Industrial Average lost 70.29 points, or 0.4 percent, to 17,316.92. The Nasdaq 100 Index climbed 0.2 percent, paring an earlier rally of 1.7 percent.
In Canada, the S&P/TSX composite index was down 229 points, or 1.5 per cent, to 14,604, weighed down by a 4 per cent drop in crude oil prices.
"On balance, I viewed it as slightly hawkish," Anthony Valeri, a market strategist in San Diego with LPL Financial Corp., said by phone. "The equity markets view it as a June hike still being a potential outcome. It's basically interpreting that the Fed will plow ahead with rate hikes despite low inflation and international woes."
The Fed also boosted its assessment of the economy and labor market, even as it expects inflation to decline further.
Fed officials are confronting divergent economic forces as they weigh the timing of the first interest-rate increase since 2006. Surprisingly strong job gains argue for tightening sooner, while inflation held down by a plunge in oil prices and a cooling global economy provides grounds for delay.
The Fed acknowledge global risks, saying that it will take into account readings on "international developments" as it decides how long to keep rates low.
Economic Strength
Policy makers gathered as recent labor market reports show fresh strength, with the jobless rate at a six-year low of 5.6 percent. U.S. employers hired 252,000 workers last month to cap the biggest annual gain since 1999 with almost 3 million jobs.
"The Fed continued to emphasize that any rate hike decisions will be very data-dependent, which has been the norm for quite some time," Joe Bell, a Cincinnati-based senior equity analyst at Schaeffer's Investment Research Inc., said in a phone interview. "People are looking closely at earnings, which has been the story of the volatility in the past week or two. Oil and the strong U.S. dollar are also creating a drag on large multinational companies."
The S&P 500 has more than tripled from its March 2009 low, buoyed by three rounds of stimulus from the Fed. The index is down 3.6 percent from an all-time high reached in December, after falling as much as 4.7 percent from the peak earlier this month.
Stimulus Programs
As the U.S. has ended its bond-buying program, the European Central Bank is expanding its stimulus plan. The ECB announced last week it would spend 60 billion euros ($68 billion) a month starting in March on purchases of debt to ward off the threat of deflation in the euro area.
Equities opened higher on Wednesday as Apple and Boeing rallied amid quarterly results, a day after benchmark indexes tumbled on concern that a stronger dollar is eroding profits at large companies.
While the dollar's climb is reducing profits at U.S. companies from Procter & Gamble Co. to Pfizer Inc. and Microsoft Corp., more than 77 percent of Standard & Poor's 500 Index members have still beaten analysts' estimates so far this earnings season, according to data compiled by Bloomberg.
The Chicago Board Options Exchange Volatility Index, known as the VIX, added 11 percent to 19.09, after jumping the most in two weeks Tuesday.
Apple Earnings
Nine of 10 main industries in the S&P 500 fell. Technology shares had the only gain, increasing 0.7 percent after the biggest drop in more than three years Tuesday.
Apple jumped 6.3 percent. Net income surged 38 percent, fueled by sales of larger-screened iPhones and refreshed Mac computers that Apple had unveiled in September, part of a barrage of new products from Chief Executive Officer Tim Cook as he sought to revitalize the company's revenue.
Boeing gained 6.2 percent, the most since 2011, as it beat analysts' estimates and predicted it would make good in 2015 in converting a record jetliner-order backlog into cash. Investors have been waiting to see Boeing start generating more cash from its plane orders and stem losses on the 787 Dreamliner.
Energy shares lost 3.5 percent, the most in three weeks, as oil tumbled as U.S. inventories rose to a three-decade high. Exxon Mobil Corp., Chevron Corp. and Schlumberger Ltd. fell at least 2.7 percent.
Yahoo! Inc. fell 2.4 percent, erasing an earlier rally of 4.9 percent. The company said Tuesday it will spin off its remaining stake in Alibaba Group Holding Ltd. The tax-free spinoff will place Yahoo's holding in the Chinese e-commerce company into a new firm called SpinCo. That firm will own all of Yahoo's shares in Alibaba, valued at about $40 billion.