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Stocks drift lower before Fed releases minutes

Steve Rothwell, AP Markets Writer

Specialist Jason Hardzewicz, left, works with traders at his post on the floor of the New York Stock Exchange Wednesday, July 10, 2013. Stocks nudged higher in early trading Wednesday before the Federal Reserve releases minutes from its most recent meeting. (AP Photo/Richard Drew)

NEW YORK (AP) -- Stocks drifted lower Wednesday ahead of the release of minutes from the Federal Reserve's latest policy meeting.

Investors have been obsessing over the Fed for weeks. They will parse the notes from the central bank's June meeting for clues about when the Fed might begin to ease back on its economic stimulus program. The minutes will be released at 2 p.m. Eastern Daylight Time.

The Dow Jones industrial average fell 24 points, or 0.2 percent, to 15,275 points as of 12:32 p.m. Eastern Daylight Time. The Standard & Poor's 500 index fell three points, or 0.2 percent, to 1,649. The Nasdaq composite gained three points, or 0.1 percent, to 3,507.

Stocks have risen for four days in a row as investors became more confident about the economy and shrugged off concerns that the Fed is close to cutting back on its $85 billion a month bond-buying program. That stimulus has been a major support for a four-year bull run in stocks.

"I suspect that the market is itching to go higher," said Peter Cardillo, chief market economist, at Rockwell Global Capital. "The fear factor of the Fed trimming is abating."

The S&P 500 has regained much of the ground it lost beginning May 22, when Fed Chairman Ben Bernanke said the central bank could ease back on its stimulus later this year if the economy was strong enough. The index is now about 1 percent below the record close of 1,669 it set May 21. It fell as much as 6 percent below the record to 1,573 on June 24.

The release of the minutes may threaten that run if history is anything to go by.

On the four days this year that the Fed has released minutes from its meetings, the S&P 500 has fallen three times. The biggest drop came Feb. 20 when the index shed 18 points, or 1.2 percent, after the minutes revealed that several Fed officials were doubtful about continuing the stimulus.

Investors will also focus on a speech Bernanke will deliver at the National Bureau of Economic Research after the market closes.

Investors are keeping an eye on corporate earnings as companies start to report results for the second quarter, which ended 10 days ago. Analysts expect earnings growth to average 2.8 percent for the companies in the S&P 500, according to data from S&P Capital IQ.

In government bond trading, the yield on the 10-year note rose to 2.66 percent from 2.64 percent. The yield on the 10-year note has stabilized this week. It climbed as high as 2.74 percent Friday after the government reported strong hiring for June. The yield has risen more than 1 percentage point since the start of May, when it fell to 1.63 percent, its lowest level of the year.

Any further increase in yields could have a negative impact on the economy and prompt the Fed to postpone any plans it had to start easing its stimulus, said Jerry Braakman, chief investment officer for First American Trust.

"Above three percent on the ten-year note, you're going to have issues," said Braakman. "It will have an impact on the economy,"

In commodities trading, the price of crude oil jumped 2 percent to the highest level in 14 months after the U.S. government reported another steep decline in the nation's supplies of oil and gasoline. Oil rose $2.16, or 2.1 percent, to $105.71 a barrel in New York.

The price of gold rose $8, or 0.6 percent, to $1,253 an ounce.

Among stocks making big moves:

— Hewlett-Packard rose 66 cents, or 2.6 percent, to $26.12 after a Citigroup analyst raised his rating on the company. The analyst doubled his price target for the stock, saying the PC maker's turnaround efforts are beginning to take hold.

—Fastenal, an industrial and construction supplies distributor, fell $1.39, or 3 percent, to $45.72 after the company reported revenue for the second quarter that fell short of analysts' estimates.

— Family Dollar Stores rose $2.30, or 3.6 percent, to $65.96 after the company's income beat analysts' forecasts.