* 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
By Ryan Vlastelica
NEW YORK, Feb 20 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
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
Energy companies were among the weakest, hurt by
disappointing corporate results and a 2.4 percent drop in crude
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
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
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.