* Housing starts drop but permits hit 4 1/2 yr high
* Fed minutes due at 2 p.m., no policy changes seen
* Energy shares weak after results, oil down 2.4 pct
* Office Depot, OfficeMax confirm merger
* Indexes off: Dow 0.1 pct, S&P 0.4 pct, Nasdaq 0.4 pct
NEW YORK, Feb 20 (Reuters) - U.S. stocks dipped on Wednesday, with energy shares falling as investors found few reasons to buy following a rally that has held major indexes near five-year highs for three weeks.
In addition, investors waited for the minutes from the Federal Open Market Committee's January meeting due at 2 p.m. (1900 GMT) for clues to the interest rate outlook.
Traders said there were unconfirmed rumors in the market that a troubled hedge fund was selling assets.
"I heard the chatter about a hedge fund liquidating things today but how big, I don't know. Certainly it sparks concern," said Michael James, senior trader at Wedbush Morgan in Los Angeles.
A jump in January of permits for future home building offered hope the housing market's recovery remains on track. A separate report showed wholesale prices rose last month for the first time in four months.
The S&P 500 has jumped about 7 percent so far this year, and is on track for its eighth straight week of gains. However, many of those weekly gains have been slight, with equities trading within a narrow range for the past few weeks, suggesting valuations may be stretched at current levels.
"The market seems very tired and listless, and investors are prone to take profits now as they wait for the music to stop," said Matt McCormick, money manager at Bahl & Gaynor in Cincinnati.
Energy companies were among the weakest, hurt by disappointing corporate results and a 2.4 percent drop in crude oil prices.
Newfield Exploration fell 5.8 percent to $25.73 while Devon Energy Corp fell 1.6 percent to $59.60. Both companies posted fourth-quarter losses, with Devon hurt as it wrote down the value of its assets by $896 million due to weak natural gas prices.
Groundbreaking to build new U.S. homes fell 8.5 percent in January but new permits for construction rose to a 4 1/2-year high while producer prices rose in January for the first time in four months.
Investors will look to the minutes from the Fed's January meeting for any indication as to how long the Fed will keep buying $85 billion in bonds each month to bolster U.S. employment. Economic data should enable the Fed to maintain its easy monetary policy.
The Dow Jones industrial average dropped 16.03 points, or 0.11 percent, to 14,019.64. The Standard & Poor's 500 Index dropped 5.81 points, or 0.38 percent, to 1,525.13. The Nasdaq Composite Index dropped 13.82 points, or 0.43 percent, to 3,199.77.
Shares of OfficeMax Inc fell 3.8 percent to $12.51 while Office Depot slumped 13 percent to $4.37 as the companies announced a $1.2 billion merger agreement. The shares had risen sharply earlier this week after a source said a deal would be announced. Rival Staples Inc fell 3.5 percent.
Toll Brothers Inc lost 4 percent to $35.43 after the largest luxury homebuilder in the United States, reported first-quarter results well below analysts' estimates.
The stock is up 9 percent so far this year, building on jump of nearly 60 percent in 2012.
"Valuations appear a bit high at these levels, and if I was in a name that had seen a huge run, I'd want to take some chips off the table," said McCormick, who helps oversee about $8.2 billion in assets.
SodaStream dropped 6.5 percent to $49.04 after the seller of home carbonated drink maker machines posted fourth-quarter earnings and provided a 2013 outlook.
According to Thomson Reuters data through Tuesday morning, of the 405 companies in the S&P 500 that have reported results, 71 percent have exceeded analysts' expectations, compared with a 62 percent average since 1994 and 65 percent over the past four quarters.
Fourth-quarter earnings for S&P 500 companies are estimated to have risen 5.7 percent, according to the data, above a 1.9 percent forecast at the start of the earnings season.