NEW YORK, Feb. 21 (UPI) -- U.S. stock indexes staggered out of the gate Thursday reflecting mixed reactions to U.S. Federal Reserve meeting minutes released Wednesday.

The Fed lowered its expectations for growth and boosted worries over inflation by increasing its overall and core inflation rate figures by 0.3 percent.

The Dow Jones industrial average dropped 48.69 points to 12,378.57, off 0.30 percent, in late-morning trading.

The Standard & Poor's 500 index was down 6.13 points, or 0.45 percent, to 1,353.90.

The Nasdaq composite index fell 1.76 points, 0.08 percent, to 2,325.34 points.

The 10-year U.S. Treasury note gained 4/32, yielding 3.877 percent.

The dollar weakened against the euro and yen. The euro traded at $1.4734, from $1.4708 Wednesday, while the dollar traded at 108.09 yen, compared with 108.19 yen Wednesday.

In Tokyo, the Nikkei average jumped 377.91 points to 13,688.28, up 2.9 percent.

Fed says rates could go either way

WASHINGTON, Feb. 21 (UPI) -- U.S. Federal Reserve meeting minutes from January reflected continued concern that declines in residential construction are slowing economic growth.

Gains in consumer spending, defense contracts and "a surge in net exports" in the final quarter of 2007 are "expected to prove largely transitory," the Fed report said.

Nonfarm payrolls increased "robustly" in December, the Fed said, with unemployment remaining steady at 4.5 percent.

But, gains in manufacturing in November and December weren't as strong as in previous years, the Fed reported.

Inflation was slowed by warmer temperatures that helped decrease energy consumption but residential construction remained "quite weak," the report said.

The Fed said economic growth would sputter forward at 1.3 to 2.0 percent for 2008 and raised its inflation index 0.3 percent for both core and non-core goods.

Investors saw the Fed's remarks on inflation as indication that another federal fund rate cut was possible.

The report indicates the Fed's willingness to adjust the rate down or up. The current rate, at 3 percent, "appeared appropriate for a time," the Fed said. But, "when prospects for growth had improved, a reversal, possibly even a rapid reversal, might be appropriate," the report said.

Baxter was unaware plant not inspected

DEERFIELD, Ill., Feb. 21 (UPI) -- Baxter Chief Executive Officer Robert Parkinson said he was unaware the Food and Drug Administration had not inspected a suspect supplier in China.

Baxter International Inc. (NYSE:BAX) has a contract with Scientific Protein Laboratories of Waunakee, Wis., the Chicago Tribune reported Thursday. But, the company had no direct financial ties to the drug company in Changzhou, China, where the active ingredient for its troubled version of heparin was produced, the paper reported.

"It's not unusual for us not to know that the FDA hasn't inspected a supplier to a supplier," Parkinson said.

Baxter's line of heparin, a blood-thinner, has been implicated in 350 allergic reactions since Jan. 1 and has been linked to 4 deaths.

Baxter has stopped production of the drug. But the company and the FDA's process of inspecting foreign concerns have both come under close scrutiny.

Chinese products, involved in a number of recalls for lead paint and tainted pet food last year, have also come under fire.

"The best way to ensure the highest quality of raw material is to have feet on the ground in China," said Dr. Patrick Soon-Shiong, chief executive officer of American Pharmaceutical Products, Inc., a rival producer of heparin.

Four-week U.S. jobless average climbs

WASHINGTON, Feb. 21 (UPI) -- Initial claims for unemployment insurance benefits fell by 9,000 in the week ending Feb. 16, the U.S. Department of Labor reported Thursday.

There were 349,000 initial claims during the week.

But, the four-week average, triggered by jumps in January, rose to 360,500, up by 10,750 and is at the highest level since 2005 when jobless claims rose in the aftermath of Hurricane Katrina.

The previous week's four-week average was 349,750, the report said.

The spike came in the week ending Jan. 26, when 378,000 new claims filed were filed.