MarketView for Febuary 19

Summary

All the major equity indexes slid into negative territory on Wednesday in a late selloff after minutes of the Fed’s latest open market committee meeting indicated that the Fed will continue to reduce its bond-buying stimulus unless there is a significant economic surprise. The market also faced technical resistance as the S&P 500 earlier traded within a point of its record closing high set last month.

Minutes from the January meeting of the Federal Reserve's policy-setting committee indicated that several policymakers wanted to hone in on the idea that their asset-purchase program would be trimmed in predictable, $10-billion steps unless there is a big economic surprise this year.

The statement doesn't deviate much from previous Fed communications, but market participants have been expecting the Fed to point to recent weakness in the economic data and reinforce their commitment to stimulating the economy.

Economic data releases on Wednesday indicated that housing starts recorded their largest drop in almost three years during the month of January. The seasonally-adjusted Producer Price Index for final demand rose 0.2 percent, giving no real indication of a broad pickup in inflation pressures.

The data was among a slew of recent economic reports affected by a severe U.S. winter, including a U.S. homebuilder confidence index on Tuesday, which suffered its largest ever one-month drop in February. The weather was also largely blamed for the sharp slowdown in hiring in December.

Nonetheless, some of the Street’s economists lowered their first-quarter growth estimates on the back of the weak housing starts data. Goldman Sachs cut its first-quarter number by a tenth of a percentage point to a 1.8 percent annual GDP growth rate. Barclays reduced its forecast by 0.3 percentage point to a 1.9 percent rate.

The S&P 500 set an all-time closing high of 1,848.38 on January 15, and came within a point of that level at its session high on Wednesday.

Tesla fell nearly 5 percent during regular trading hours, but jumped to nearly 12 percent after the bell. The company posted better-than-expected fourth-quarter results and said deliveries of its Model S electric sedan could increase by more than 55 percent this year. Look for a possible share price record high on Thursday.

Facebook fell over 2 percent in extended trading after closing at a record high, on news it will buy the mobile-messaging startup WhatsApp for $16 billion in cash and stock. Facebook, the world's largest social network, is looking for ways to boost its popularity, especially among a younger crowd.

Safeway rose 3.2 percent in extended-hours trading after the second-largest mainstream grocery store operator said it is in talks about a possible sale of the company.

Chelsea Therapeutics rose 24.4 percent to $6.16 during regular trading hours a day after its drug Northera, which treats a rare form of low blood pressure associated with neurological disorders such as Parkinson's disease, won approval from the FDA.

Kay Jewelers parent Signet Jewelers said it would acquire smaller rival Zale Corp for $21 per share in cash, valuing the mid-tier jeweler at about $690 million. The offer represents a premium of about 41 percent to Zale's close of $14.91 on Tuesday.

Shares of Signet Jewelers gained 18.1 percent to close at $93.65. Zale ended the day up 40.3 percent, closing at $20.92.

Approximately 6.95 billion shares changed hands on the major equity exchanges, approximately in line with the 7.06 billion average so far in February, according to data from BATS Global Markets.