U.S. stocks opened lower Wednesday, a day after the Dow Jones Industrial Average and S&P 500 hit record highs, as investors weighed mixed housing data ahead of the latest minutes from the Federal Reserve’s October policy meeting.
Data released Wednesday showed housing starts unexpectedly slipped 2.8 percent in October while building permits jumped 4.8 percent last month to a six-year high, pointing to a steadily improving housing market. Ground-breaking on new homes declined 2.8 percent to a seasonally adjusted annual 1.009 million-unit pace compared with September's previously reported 1.017 million-unit pace, the Commerce Department said Wednesday in its latest New Residential Construction report, considered a critical indicator of economic strength. Building permits, a bellwether for future construction, jumped 4.8 percent to a 1.080 million-unit pace last month, the highest since June 2008.
"The S&P and Dow have reached new record levels as the end-of-the-year rally continues. The question is simple, 'Where do we go from here?' We believe the rally will expand as the uneven world growth factor encourages central bankers to stay the course," Peter Cardillo, chief market economist at Rockwell Global Capital, said in a note.
The Bank of Japan released its latest decision on monetary policy Wednesday after Japanese Prime Minister Shinzo Abe announced an 18-month delay in a second sales tax hike after the country unexpectedly fell into recession. The central bank kept its current monetary policy intact after Japan surprised the global financial markets last month and expanded its massive quantitative easing program to 80 trillion yen ($682 billion) each year, up from 60 trillion-70 trillion yen currently.
Also on Wednesday, the Federal Reserve is scheduled to release its latest minutes from the Federal Open Market Committee’s meeting on Oct. 28-29 at 2 p.m. EST. Investors will be eyeing the report to see whether the FOMC will hint at when the central bank will begin raising interest rates, currently at historic lows. "With the Federal Reserve now ending its asset-buying program, the market will need to perform on economic and earnings growth. We believe these remain favorable. We continue to see a strong quarter for equities, with new record highs by year-end," Cardillo said.
The blue-chip Dow Jones Industrial Average, which measures 30 large industrial stocks, dropped 44.43 points, or 0.25 percent, to 17,643.39; the S&P 500 Index fell 7.30 points, or 0.36 percent, to 2,044.55. The Nasdaq Composite declined 27.78 points, or 0.58 percent, to 4,674.85.