U.S. Stocks Fluctuate Amid Fed Minutes as Retailer Shares Slide 

(Bloomberg) --U.S. stocks fluctuated after erasing losses, as minutes from the latest Federal Reserve meeting showed officials were split on whether an interest-rate increase was warranted soon.

The S&P 500 Index rose less than 0.1 percent to 2,179.12 at 2:27 p.m. in New York, after wiping out a 0.4 percent slide. The Dow Jones Industrial Average added 8.73 points to 18,560.75. The Nasdaq Composite Equities slipped less than 0.1 percent.

“The knee-jerk reaction is still lower-for-longer,” said Mark Luschini, chief investment strategist at Philadelphia-based Janney Montgomery Scott LLC, which manages $54 billion. “There were a couple innuendos that a few members thought we should be acting. But other language offered enough excuses for things taking place both domestically and globally to justify doing nothing for the time being. It seems like the Fed is finding reasons not to hike interest rates, and therefore it was a market-friendly release.”

Officials said they needed more data “in order to gauge the underlying momentum in the labor market and economic activity,” the minutes released in Washington said. Since the meeting, data has been mixed with hiring showing a sharp increase while retail sales stagnated in July. Producer prices contracted last month and consumer prices were flat, bolstering the argument that inflation remains subdued.

Equities rebounded as utilities, health-care and financial stocks shook off earlier declines. Target and Lowe's each lost more than 5.9 percent, while Staples Inc. dropped 7.5 percent after its profit outlook was short of estimates. Cisco Systems Inc. sank 1.7 percent before its earnings release later today, after a report said it will cut as many as 14,000 jobs. Urban Outfitters Inc. was a bright spot, surging 16 percent after its results exceeded analysts' forecasts.

Shares fell from all-time highs Tuesday after New York Fed President William Dudley said the central bank could potentially raise interest rates as soon as next month. His warning that investors are underestimating the likelihood of higher borrowing costs took some momentum out of a six-week rally for stocks. Traders' bets for a rate increase were pushed back today, with March 2017 now the first month with at least even odds of such a move, versus December before the minutes were released.

St. Louis Fed President James Bullard in remarks today before the minutes stuck with his projected target for fed funds rate of 0.63 percent over next 2 1/2 years, and reiterated a need for a new approach to policy normalization.

Equities climbed to fresh peaks in the month through Monday, boosted by better-than-estimated corporate results, an improving labor market and optimism central banks will stay supportive of growth. The gains have pushed the S&P 500's valuation relative to future earnings to the highest in more than a decade. The benchmark closed yesterday up 6.6 percent in 2016, after rallying nearly 20 percent from a 22-month low in February.

The earnings season is drawing to a close, with fewer than 40 of the S&P 500's companies yet to report. So far, 78 percent of the firms have beaten profit projections and 56 percent topped on sales. While results have exceeded predictions, analysts forecast index members will still post a 2.5 percent drop in net income, and estimate a 0.8 percent decline for the quarter ending in September. That would extend the slide in earnings to a sixth period, the longest since the financial crisis.