MarketView for January 3

Summary

The major equity indexes fell slightly on Thursday after signs the Federal Reserve has growing concern about its highly simulative monetary policy, giving Wall Street’s players a reason to pull back after a two-day rally. The minutes from the Fed's December policy meeting, released on Thursday, showed increasing reticence about adding to the central bank's $2.9 trillion balance sheet, which it expanded sharply in response to the financial crisis and recession of 2007-2009.

Some policymakers thought asset buying should be slowed or stopped before the end of 2013 while others highlighted the need for further stimulus. The Fed's policy of easy credit has helped push the S&P 500 to a 13.4 percent gain in 2012. Ending that policy would remove an incentive for investors to purchase riskier assets like stocks.

Despite the concerns about the effects of its asset purchases, the Fed look set to continue its open-ended stimulus program for now.

Economic data showed private-sector employers shrugged off a looming budget crisis and stepped up hiring in December, offering further evidence of underlying strength in the economy as 2012 ended.

The government's broader monthly payrolls report, due on Friday, is expected to show the economy created 150,000 jobs compared with 146,000 in November, according to a Reuters poll. The U.S. unemployment rate is seen holding steady at 7.7 percent.

Retailers advanced after several major companies in the sector exceeded expectations of modest sales increases in December, with the S&P retail index .SPXRT up 0.4 percent.

Shares of Costco rose 1 percent to $102.49 after the company reported a better-than-expected 9 percent rise in December sales at stores open at least a year. Gap saw its share price rise 2.3 percent to $32.09 following news that the retailer will buy women's fashion boutique Intermix the Wall Street Journal reported.

Family Dollar Stores stumbled 13 percent to $55.74 on the company's report of lower-than-expected quarterly profit.

Volume was relatively strong, with about 6.68 billion shares changing hands on the three major equity exchanges, slightly above the 2012 daily average of 6.42 billion shares.