U.S. stocks slid on Wednesday in a late sell off after minutes of the U.S. Federal Reserve's latest policy-setting meeting indicated that the central bank will keep trimming its bond-buying stimulus unless there is a significant economic surprise.
The market also faced technical resistance as the S&P 500 earlier traded within a point of its record closing high set last month.
Minutes from the January meeting of the Federal Reserve's policy-setting committee showed that several policymakers wanted to hone in on the idea that their asset-purchase program would be trimmed in predictable, $10-billion steps unless there is a big economic surprise this year.
The statement doesn't deviate much from previous Fed communications, but market participants have been expecting the Fed to point to recent weakness in the economic data and reinforce their commitment to stimulating the economy.
"I think the rally that we've seen off the 1,750 low (on the S&P 500) was largely driven by the sense the Fed is going to slow down their retracement if it's necessary," said Uri Landesman, president of Platinum Partners in New York.
"Anything that puts a crimp in that belief is going to scare this market," he said. "This market is trading at nosebleed levels, and so it will not have a huge tolerance even for news that can be shaded in a bad direction."
Data on Wednesday showed U.S. housing starts recorded their biggest drop in almost three years in January. The seasonally-adjusted U.S. Producer Price Index for final demand rose 0.2 percent, giving no real indication of a broad pickup in inflation pressures.
The data was among a slew of recent economic reports affected by a severe U.S. winter, including a U.S. home builder confidence index on Tuesday, which suffered its largest ever one-month drop in February. The weather was also largely blamed for the sharp slowdown in hiring in December.
Some economists, however, lowered their first-quarter growth estimates on the back of the weak housing starts data. Goldman Sachs cut its first-quarter growth estimate by a tenth of a percentage point to a 1.8 percent annual rate. Barclays reduced its forecast by 0.3 percentage point to a 1.9 percent rate.
The Dow Jones industrial average fell 89.84 points or 0.56 percent, to end at 16,040.56. The S&P 500 slipped 12.01 points or 0.65 percent, to finish at 1,828.75. The Nasdaq Composite dropped 34.83 points or 0.82 percent, to close at 4,237.954.
The S&P 500 set an all-time closing high