U.S. stocks retreated as the Federal Reserve reduced its monthly bond buying to $55 billion as more central bank officials predicted their target interest rate would rise by the end of next year.
The Standard & Poor’s 500 Index (SPX) added less than 0.2 percent to 1,868.11 at 2:06 p.m. in New York. The Dow Jones Industrial Average was little changed at 16,292.86.
Fed officials predicted their target interest rate would be 1 percent at the end of 2015 and 2.25 percent a year later, higher than previously forecast, as they upgraded projections for gains in the labor market.
Most Federal Open Market Committee participants reiterated their view that the Fed will refrain from raising the benchmark interest rate until 2015. The median rate among 16 Fed officials rose from December, when they estimated the rate at the end of next year at 0.75 percent, and 1.75 percent for the end of 2016.
Fed Chair Janet Yellen said last month the U.S. economy was strong enough to withstand measured reductions to the central bank’s monthly bond purchases. Three rounds of Fed stimulus have helped push the S&P 500 up as much as 178 percent from a 12-year low, as U.S. equities enter the sixth year of a bull market that started March 9, 2009.
The S&P 500 advanced 1.7 percent in the last two days as Russia pledged not to seek territory beyond Crimea. The U.S. and Europe are preparing to ratchet up sanctions on Russia after President Vladimir Putin signed an accord setting in motion Crimea’s accession to Russia. With visa bans and asset freezes on Russian officials failing to sway Putin, European Union leaders will meet tomorrow to consider “additional and far-reaching consequences.”
Investors have added $8 billion to U.S. equity exchange-traded funds in the past five days and $1.1 billion to bond ETFs, data compiled by Bloomberg show. Materials stocks absorbed the most money among industry ETFs, taking in $689 million during the past week.
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