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Feb. 20, 2013 at 8:49 PM   |   Comments

Fed minutes weigh on Wall Street

NEW YORK, Feb. 20 (UPI) -- U.S. stock indexes dropped Wednesday after the Federal Reserve revealed divisions about how to support the economic recovery.

In meeting minutes from its late January meeting, the Fed revealed a variety of opinions among policy makers concerning its asset purchasing program. The range of options under discussion included support for ending the program before a previously announced unemployment benchmark was met to continuing with the purchases past that point.

The minutes also described the recovery as slowing down.

In a report released early Wednesday, the U.S. Commerce Department said housing starts reached a seasonally adjusted annual rate of 890,000 in January, down from 973,000 in December and lower than the consensus prediction of 925,000.

By close of trading, the Dow Jones industrial average gave up 108.13 points or 0.77 percent to 13,927.54.

The Standard and Poor's 500 lost 18.99 points, or 1.24 percent, to 1,511.95 points.

The Nasdaq composite shed 49.19 points, or 1.53 percent, to 3,164.41 points.

On the New York Stock Exchange, 718 stocks advanced and 2,351 declined on a volume of 4.1 billion shares traded.

The 10-year U.S. treasury fell 1/32 to yield 2.017 percent.

Against the dollar the euro fell to $1.3285 from Tuesday's $1.3389. Against the yen, the dollar was higher at 93.69 yen from 93.57 yen.

In Tokyo, the Nikkei 225 closed at 11,468.28 points, adding 95.94 points or 0.84 percent.

In London, the FTSE 100 index added 0.15 percent, 9.64 points, to 6,388.71.


Fed policy makers split on asset purchases

WASHINGTON, Feb. 20 (UPI) -- The U.S. Federal Reserve revealed Wednesday that there were a variety of opinions on its policy committee concerning its $85 billion per month asset purchases.

"Several participants," the Fed said in minutes of its late January Open Market Committee meeting, "emphasized that the committee should be prepared to vary the pace of asset purchases, either in response to changes in the economic outlook or as its evaluation of the efficacy and costs of such purchases evolved."

The minutes said "a number of participants," said the Fed might be better "to taper or end its purchases before it is judged that a substantial improvement for the labor market had occurred."

The Fed had previously said that its monetary policy would most likely remain intact until the unemployment rate dropped to 6.5 percent. The unemployment rate is currently at 7.9 percent.

"Several others argued that the potential costs of reducing or ending asset purchases too soon were also significant," the minutes said.

The disagreement among committee members goes full circle, the minutes revealed, as "a few participants noted examples of past instances in which policy makers had prematurely removed accommodation, with adverse effects on economic growth."

The central bank has been purchasing treasury notes and mortgage-backed securities in an effort to keep interest rates low, which may allow businesses to expand.


Housing market in transition in Canada

OTTAWA, Feb. 20 (UPI) -- Home prices slipped in January in Canada for the fifth consecutive month, a development not entirely unwelcome, the country's central bank governor has said.

The Teranet-National Bank House Price Index showed prices down 0.3 percent in an 11-city index, the Canadian Broadcasting Corp. reported Wednesday.

Prices fell in seven of the 11 cities tracked, with the exceptions being Victoria, Halifax, Quebec City and Ottawa.

Bank of Canada Gov. Mark Carney in recent remarks said, "real wealth is build through innovation, and it's gained through hard work. It's not through some magical asset inflation."

Carney said he expects the Canadian housing market to remain subdued for the next two years, The Globe and Mail reported.

The pattern is a necessary transition that shifts the country's economy from one driven by exports, rather than by consumer borrowing, Carney has said.

The home price index said prices were up 2.7 percent from January 2012, but the Canadian Real Estate Association said sales activity has declined 5.2 percent in January compared to a year ago.

The association said the decline was due to tighter lending rules pushed by the government.

"We anticipate a further softening in both sales and pricing in 2013," Scotiabank economist Adrienne Warren said in a research note.


Frontier Airlines shellacked by customers

DENVER, Feb. 20 (UPI) -- Canceling promotional flights from Columbia, Mo., to Orlando, Fla., has left Frontier Airlines with a string of stinging comments on its Facebook page.

"I can't believe you are still in business if this is how all customers are treated. What I need and all the other families need is for you to make it right, which doesn't seem likely to happen," posted one irate customer.

Another customer, April Ream, said she is "very disgruntled and a refund is not enough to compensate for our losses. They should have put a 'stop sell' on the tickets and then fulfilled the obligation to the customer[s] who have already paid."

The Denver Post reported Wednesday the flap began when Frontier scratched the route from its schedule due to low demand. Customers were even more upset because Frontier said the promotional fare was so low it could not find alternative options for customers with tickets, so the airline offered refunds instead of helping them with alternative travel arrangements.

"It shows that Frontier is doing a miserable job of taking care of the people who actually have chosen Frontier for a trip. Frontier wants to be perceived as a good, efficient airline, but this simply puts more doubts in everybody's minds," said public relations consultant Robert L. Keyser III.

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