MarketView for March 11

Summary

The major equity indexes were down again on Tuesday, with selling picking up late in the session, as investors took money off the table. Nonetheless, the S&P 500 still ended the day down less than 1 percent away from a record high set last week. Indexes had chalked up swings between positive and negative numbers during the first half of the session as a lack of major corporate earnings or market-affecting data kept trading activity directionless. But as the closing bell drew near, the indexes were stuck at their lows of the day.

Federal prosecutors in New York are examining whether General Motors is criminally liable for failing to properly disclose problems in some vehicles that were linked to 13 deaths and led to a recall last month. GM closed down 5.1 percent to $35.18.

Shares of fuel cell maker Plug Power fell 41.5 percent to $6.03 after short-seller Citron Research said the fair value of the stock was 50 cents. Shares of other fuel cell makers fell, with Fuel Cell Energy down 16.5 percent to $3.28; Ballard Power Systems was off 25.9 percent, closing at $5.10 while Hydrogenics fell 14.7 percent. Shares in the sector have been on a tear, with Plug Power up 940 percent since the end of October.

Urban Outfitters fell 4.3 percent to close at $35.91 after it reported lower-than-expected quarterly sales and said it was "very cautious" on its current quarter. American Eagle Outfitters ended the day down 7.8 percent to $13.10 after it forecast earnings for the current quarter that was short of expectations.

Men's Wearhouse indicated that it had achieved an agreement to acquire a key rival, Jos. A. Bank, for about $1.8 billion, ending a five-month saga that started with Jos. A. Bank offering to buy Men's Wearhouse.  Men's Wearhouse saw its share price rise 4.7 percent to close at $57.14, while Jos. A. Bank added 3.9 percent to end the day at $64.22.

Boyd Gaming closed up 16.5 percent to $13.75 a day after hedge fund Elliott International disclosed a 4.99 percent stake in the gaming company.

Freeport-McMoRan Copper & Gold fell 2.1 percent, bringing the decline in the past four sessions to 9.4 percent. Copper prices on the London Metal Exchange hit their lowest level since July 2010 under pressure from rising inventories of the metal and slow demand.

Myriad Genetics fell 8.3 percent to $34.60. The diagnostics company said a denied a motion that would have stopped rival Ambry Genetics from selling a similar version of Myriad's cancer test.

La Jolla Pharmaceutical chalked up a gain of 64.8 percent to end the day at $17.96 after the company said its lead experimental drug to treat chronic kidney disease met the main goal of improving kidney function in a mid-stage study.

Approximately 6.9 billion shares changed hands on the major equity exchanges, according to the latest available data from BATS Global Markets, a number that was slightly above the 6.8 billion daily share averages so far this month.

Fed Could Change Policy Stance

The word on the Street is that Janet Yellen's first policy-setting meeting as chair of the Fed will focus on how to finesse a rewriting of the Fed's promise to keep interest rates low without roiling financial markets. The thinking on the Street is that the Fed will likely decide to eliminate their threshold of a 6.5 percent unemployment rate for considering a rate rise, and instead embrace new language that is less specific about when tighter policy might come.

The threshold has been a central theme of the Fed's so-called forward guidance since December 2012, when it was first adopted to underscore a commitment to stimulus until the U.S. economy was on surer footing.

However, the unemployment rate has come down with surprising speed, and now stands at 6.7 percent, leaving Fed officials anxious to adopt guidance more in keeping with their view that the economy won't be ready for higher rates for some time to come. The trick for Yellen will be re-crafting the statement without changing expectations in markets, which currently don't see a rate rise until midway through next year.

"This is probably a reasonable time to revamp the statement to take out that 6.5 percent threshold because it's not really providing any great value," William Dudley, the president of the New York Fed, said last week. "I'd rather do it before we reach the threshold rather than after."

Fed officials have chalked up recent signs of economic weakness to unusually severe winter weather, and they appear intent to move ahead with another $10 billion reduction in their monthly bond-buying stimulus, taking it down to $55 billion. That leaves a revamping of the forward guidance on rates as the focal point for debate when officials gather on March 18-19.

They will issue a policy statement at 2 p.m. EDT on March 19. A half hour later, Yellen, the Fed's former vice chair, will conduct her first news conference as head of the world's most influential central bank.

The Fed will also release updated forecasts from its 17 policymakers for economic growth, inflation and unemployment. Most importantly, officials will revise their predictions for when they will finally begin to raise rates after more than five years of holding them close to zero.

As it stands, the Fed has said it would not consider a rate rise until well after the unemployment rate drops below 6.5 percent, as long as inflation remains contained.

It is unclear exactly what will replace this guidance, which is the brainchild of Chicago Fed President Charles Evans, a stalwart Yellen ally who himself has acknowledged the thresholds have outlived their usefulness.

"We have had discussions on the way to formulate the next vintage of this guidance for some time," Evans said on Monday. "I can't predict to you when we will pull the trigger."

What is clear is that the Fed will look well beyond the jobless rate in gauging the health of the labor market and deciding when to raise rates.

Yellen has emphasized the need to examine "a broad range of indicators," including the number of part-time workers who want full-time work and the percentage of long-term unemployed.

"The unemployment rate is not a sufficient statistic for the state of the labor market," she told lawmakers last month.

But a clear message can be complicated to convey. The Atlanta Fed publishes a "spider chart" plotting a range of data that, to the initiated, shows an overall improvement in labor conditions and the New York Fed this week released its own "eight faces" of the job market graphic to track a number of key indicators.

"The art in this is conveying information that helps people plan and financial markets align their expectations with ours," Dennis Lockhart, head of the Atlanta Fed, told Reuters last week.

Labor market gauges are not the only things the Fed will be watching in making a judgment on when to raise rates. As the jobless rate declined close to the Fed's threshold, the central bank began to emphasize the low level of inflation, which is running well under its 2 percent target. It could redouble that emphasis as a way to underscore its commitment to keeping rates low for some time to come.

Under Yellen's predecessor Ben Bernanke, the Fed's post-meeting statement swelled in verbiage as the central bank packed increasingly more information into its written communications. Given the difficulty of laying out clear guidance, Yellen might reverse that trend.