Fed meeting minutes deflate stocks, but market recovers

NEW YORK – The stock market mostly recovered from an afternoon slump Wednesday and ended with slight losses.

In minutes from their latest meeting released Wednesday afternoon, Federal Reserve officials said they saw a variety of threats to the U.S. economy, including a slowdown in China and a looming budget crunch in Washington. The Fed also didn’t signal that new steps to stimulate the economy were on the way.

Stock investors took the news badly at first, but by the end of the day were taking it in stride. The Dow Jones industrial average dropped as many as 118 points shortly after the 2 p.m. release of the Fed’s minutes. But after a recovery in the last hour it was down just 48 points at the bell.

Fed officials said the economy could struggle if Congress fails to avert tax hikes and across-the-board spending cuts scheduled for the end of the year. They also worried that Europe’s debt crisis and China’s slower growth would weigh on the U.S.

It was what the Fed didn’t say that really tripped the stock market up, said Steven Ricchiuto, chief economist at Mizuho Securities USA. He said many traders had hoped to see evidence that the Fed was prepared to pull the trigger on a new bond-buying effort to prod the economy forward, but they didn’t get it.

The Dow closed at 12,604.53, down 48.59 points. The Standard & Poor’s 500 index slipped 0.02 of a point to 1,341.45. The technology-focused Nasdaq composite index lost 14.35 points to 2,887.98.

 

S&P reduces credit rating of J.C. Penney once again

NEW YORK – Standard & Poor’s Ratings Services lowered its credit rating on J.C. Penney Co. further into junk status late Wednesday, saying the department store chain’s performance remains weak.

The ratings agency reduced its corporate credit rating on the Plano, Texas, company to “B+” from “BB-.” The junk rating is four notches below investment grade. The move marks the second downgrade from S&P since mid-May.

“The downgrade reflects recent performance that has been below our expectations and our view that it will remain weak over the next 12 months,” S&P credit analyst David Kuntz said in a written statement.

Under a new CEO, former Apple Inc. executive Ron Johnson, J.C. Penney is overhauling every aspect of its business, from its pricing to the brands it carries. But concerns are growing about the company’s ability to turn its business around.

 

Group predicts overload of trains due to Asia coal sales

BILLINGS, Mont. – A conservation group is predicting that ambitious Asian export plans by U.S. coal-mining companies could lead to a more than tenfold spike in coal trains through the Northwest.

The Western Organization of Resource Councils said Wednesday that roughly 60 coal trains per day could pass through cities such as Billings and Spokane, Wash. The group says that could tie up rail lines, cause environmental problems and leave local governments on the hook for costly rail crossing improvements.

The fuel would come primarily from Montana and Wyoming. That’s a 1,500-mile haul via Idaho to Oregon, Washington and British Columbia.

Representatives of the coal and rail industries say the report erroneously assumes all pending West Coast coal ports will be built.