* Investors looking for clarity on stimulus from Fed meeting
* U.S. budget deal clears crucial vote in U.S. Senate
* KFN shares rally after KKR plans to pay $2.6 billion for
* Dow off 0.1 pct, S&P 500 down 0.3 pct, Nasdaq off 0.1 pct
By Ryan Vlastelica
NEW YORK, Dec 17 U.S. stocks closed slightly
lower on Tuesday, with investors reluctant to make big bets
before the results of a Federal Reserve meeting that could give
some clarity as to when the central bank will begin trimming its
The policy-setting Federal Open Market Committee is expected
to issue a statement on Wednesday at the meeting's conclusion.
While the Fed isn't expected to start winding down its purchases
of $85 billion a month in bonds until March, recent
stronger-than-expected economic data increased the odds that
tapering could occur sooner.
The Fed has said it would begin to slow the program when
certain economic indicators meet its targets. Some market
participants believe that the U.S. central bank will upgrade its
economic forecasts in the meeting.
"The most recent data has pulled forward expectations on
when tapering could start," said Hayes Miller, who helps oversee
about $57 billion as head of asset allocation in North America
at Baring Asset Management in Boston. "We think the Fed will err
on the side of caution, but everyone is taking a wait-and-see
The CBOE Volatility Index or VIX, a measure of
investor anxiety, rose 1.1 percent to close at 16.21, its
highest level since mid-October.
The Dow Jones industrial average slipped 9.31 points,
or 0.06 percent, to close at 15,875.26. The Standard & Poor's
500 Index declined 5.54 points, or 0.31 percent, to
finish at 1,781.00. The Nasdaq Composite Index fell 5.84
points, or 0.14 percent, to end at 4,023.68.
Stocks fluctuated between losses and break-even levels
throughout Tuesday's session, briefly dipping to session lows
after a two-year U.S. budget deal cleared a Senate procedural
vote that all but assured its passage by the Senate as early as
Wednesday. The gridlock that led to a partial government
shutdown in October was considered a reason for the Fed to hold
off on tapering.
U.S. consumer prices were flat in November, but a bounce
back in the annual inflation rate from a four-year low will
probably give the Fed some room to start the tapering. Separate
data showed the U.S. current account deficit was the smallest in
four years in the third quarter as exports increased and more
income was earned abroad.
In corporate news, shares of specialty finance company KKR
Financial Holdings surged 30.6 percent to $12.34 a day
after KKR & Co said it would acquire the company for
$2.6 billion. KKR slid 1.2 percent to $24.79.
Facebook rose 2 percent to $54.86 after the Wall
Street Journal reported that the social network would begin
selling video ads later this week.
Shares of 3M climbed 2.9 percent to $131.39 after
the Dow component affirmed its outlook and raised its dividend.
Boeing's board raised the company's dividend about 50
percent on Monday and approved $10 billion in new stock-buyback
authority that the company said it would use in the next two to
three years. Boeing's stock gained 0.9 percent to $135.88.
AT&T said it would sell its wireline operations in
Connecticut to Frontier Communications for $2 billion in
cash, partly to fund the expansion of its 4G network. Frontier's
stock jumped 8.6 percent to $4.78 and ranked as the S&P 500's
biggest percentage gainer. AT&T fell 0.9 percent to end at
Jabil Circuit fell 4.8 percent to $18.72 in
extended-hours trading after the company reported its
second-quarter results. The stock had ended regular trading at
$19.72, up 0.2 percent.
About 52 percent of the shares traded on both the New York
Stock Exchange and the Nasdaq closed lower.
About 5.06 billion shares traded on all U.S. platforms,
according to BATS exchange data.