By Amrith Ramkumar and Nathan Allen
U.S. stocks extended modest declines Wednesday after minutes from the Federal Reserve's latest meeting showed the central bank is comfortable leaving interest rates where they are, potentially surprising analysts who expect the Fed to lower rates later in the year.
The Dow Jones Industrial Average fell 72 points, or 0.3%, to 25805. The S&P 500 declined 0.2%. The broad equity gauge entered the day up 14% for the year and 2.8% below its April 30 record.
The tech-laden Nasdaq Composite slipped 0.3%.
Wednesday's minutes showed several Fed officials raised concerns about what might happen if inflation continues holding at lower levels. Some analysts have lifted bets that the Fed will lower rates by the end of 2019 amid tepid price pressures and heightened trade tensions.
Still, many expect updates on trade policy to dictate market moves and expectations for the economy in the coming weeks.
Shifts in U.S.-China trade relations have swung stocks in both directions in recent weeks, with signs of easing tensions boosting risk assets and fears of an extended tariff fight hurting them.
Chip makers reliant on trade flows and Chinese demand have been among the most volatile stocks, with the PHLX Semiconductor Index dropping 13% so far this month following a 35% rise in the first four months of 2019. It shed 2.2% Wednesday after a U.S. federal judge ruled that chip maker Qualcomm illegally suppressed competition for cellphone chips. Shares fell 12%.
The declines followed a Tuesday rebound for chip stocks after the White House granted temporary exemptions to an export blacklist against Huawei Technologies, potentially easing U.S.-China tensions as the two sides seek to get trade talks back on track. Some analysts expect trade-related swings to continue until investors get more clarity on escalating tariff threats by both sides.
"My guess is there will be some uncertainty being created for the next three to six months, but I think there will be some resolution," said Mustafa Sagun, chief investment officer at Principal Global Equities.
Energy stocks also fell alongside oil prices Wednesday after government data showed a surprising increase in crude stockpiles last week. The S&P 500 energy sector shed 1.7%.
Among individual stocks Wednesday, Target shares advanced 9.6% after the retailer posted a larger-than-expected rise in same-store sales for the latest quarter.
Shares of Lowe's slid 11% following downbeat full-year earnings targets from the home-improvement retailer. And Nordstrom declined 9.1% after the retailer posted a drop in net sales.
Still, earnings have generally been better than feared so far this year, and economic data pointing to strength in the U.S. consumer have also underpinned stocks in 2019.
"The data is probably more mixed but still to the positive side," Mr. Sagun said. "We haven't seen the extreme deterioration."
The yield on the benchmark 10-year U.S. Treasury note fell to 2.391% Wednesday, according to Tradeweb, from 2.428% a day earlier. Bond yields fall as prices rise.
Elsewhere, the British pound dropped further against the dollar after closing at a four-month low on Tuesday as investors weighed the latest push by U.K. Prime Minister Theresa May to gain parliamentary support for her Brexit deal.
The Stoxx Europe 600 fell 0.1%.
Earlier, Hong Kong's Hang Seng and Korea's Kospi both gained 0.2%, Japan's Nikkei edged up 0.1% and the Shanghai Composite dropped 0.5%.
Shares in video-surveillance company Hangzhou Hikvision Digital Technology fell 5.5% Wednesday on reports that it could be the latest company to be blacklisted by the U.S.
Write to Amrith Ramkumar at firstname.lastname@example.org