Dow, S&P flat in choppy action following Fed minutes

By Leah Schnurr

NEW YORK (Reuters) - U.S. stocks were mostly flat in choppy trading on Wednesday, stalling after a four-day winning streak as investors kept trying to gauge when the Federal Reserve may scale back on its economic stimulus.

Minutes from the Federal Reserve's June policy meeting released on Wednesday afternoon showed many officials wanted more reassurance that the labor market was improving before reining in stimulus measures. Even so, consensus built within the Fed about the likely need to begin pulling back soon.

The three major U.S. stock indexes recovered some ground immediately following the release of the minutes, although both the percentage and point gains for the day at that point were modest. But the Dow and the S&P 500 subsequently retreated and turned negative as investors parsed the details of the Fed's minutes.

With less than 30 minutes to go before the closing bell, both the Dow and the S&P 500 traded little changed.

Fed Chairman Ben Bernanke spooked investors last month when he said the economy's expansion was strong enough for the central bank to start slowing the pace of its bond purchases later this year.

Some in the market have pegged September as when the Fed could potentially start pulling back, a view that was reinforced by last week's stronger-than-expected jobs report for June.

"Even though the minutes were more dovish than expected, the impact of that is somewhat discounted by the continued strength in the labor market that was seen after the Fed's last meeting," said Jake Lowery, Treasury trader at ING Investment Management in Atlanta.

The Dow Jones industrial average slipped 2.88 points, or 0.02 percent, to 15,297.46. The Standard & Poor's 500 Index dipped 0.02 of a point, or unchanged on a percentage basis, to 1,652.30. But the Nasdaq Composite Index gained 16.09 points, or 0.46 percent, to 3,520.35.

The three major U.S. stock indexes jumped to session highs at 2:04 p.m. (1804 GMT) shortly after the FOMC minutes were released, a Thomson Reuters chart showed. The Dow climbed as high as 15,348.95 and the S&P 500 rose above 1,657, while the Nasdaq edged above 3,522. But those gains were short-lived.

The S&P 500 has risen more than 2 percent over the past five sessions, pushing the benchmark index to just about 1 percent below its May 21 all-time closing high of 1,669.16. Those gains came largely on waning fears about imminent reductions to the Fed's $85 billion a month in bond purchases.

Bernanke will speak after the closing bell before the National Bureau of Economic Research in Cambridge, Massachusetts. Like the FOMC minutes, his comments will be eyed for clues about the Fed's stimulus plans.

In the retail sector, Family Dollar Stores Inc shot up 8.3 percent to $69.24. The stock was the S&P 500's top performer after the discount chain posted quarterly earnings and was trading at a seven-month high.

On the downside, Nabors Industries Ltd slid 6.3 percent to $15. The stock was the S&P 500's worst performer after the owner of the world's largest land-drilling rig fleet warned on Tuesday that its second-quarter operating profit would fall short of market expectations.

(Editing by Jan Paschal)