Nov. 20 - Summary: Stocks fall after Fed minutes; inflation remains under control; consumer spending rises; signs of a J.C. Penney turnaround; Lowe's still lagging rival Home Depot. Bobbi Rebell reports.
Stocks took a hit on Wednesday. The major indexes closing to the downside after minutes from the Federal Reserve said the central bank could slow bond purchases at one of its next few meetings if the economy improved enough. At the Reuters Global Investment Summit, hedge fund manager Deepak Narula of Metacapital Management said the markets will adjust eventually. SOUNDBITE: DEEPAK NARULA, FOUNDER, METACAPITAL MANAGEMENT (ENGLISH) SAYING: "In the end the Fed's job is to help support the economy through its various easing measures when the economy needs the help but eventually it has to wean the markets away from the QE crack so to say and so eventually markets will settle just fine. The transition may be one that has some volatility but if you look at the Fed's total footprint and what they buy - $85 billion a month - it's a big number. But financial markets are a lot larger than that and so there may be some kind of short term unhappiness in some sectors but eventually the markets will do just fine. " Inflation remains in check. The Consumer Price Index fell just slightly last month on weak gasoline prices. Over the last year its had the smallest year over year increase since 2009. And consumer spending rose more than expected in October. A sign that the government shutdown had only a limited impact and that the holiday shopping season could be a good one for retailers. But a separate report showed home resales fell for the second month in a row - high mortgage rates and tight supplies hurting the market. The median price of a home: $199,500, up 12.8 percent. Signs of a possible turnaround at troubled retailer J.C. Penney. The retailer said November sales were encouraging and that it's in-house brands were lifting profit margins. Those comments overshadowed the loss it reported and sent its stock higher. Deere stock got a boost after it offered a surprisingly upbeat earnings forecast for 2014. The company said even though they expect a slowdown in demand for agricultural machinery- that will be offset by sales of construction and forestry equipment. Number two home improvement chain Lowe's still struggling to catch up with rival Home Depot. Lowe's gave a disappointing fiscal year outlook after reporting lower-than-expected results. Just Tuesday Home Depot raised its forecast for the third time in three quarters. Shares of both companies were lower. European shares inched higher on reports that the European Central Bank was mulling setting negative deposit rates.