DJI - NEW YORK, Jan 3 (Reuters) - U.S. stocks edged lower on Thursday after minutes from the latest Federal Reserve meeting showed growing concern about the risks of its highly stimulative monetary policy.
Despite the concerns about the effects of its asset purchases, the Fed look set to continue its open-ended stimulus program for now.
The minutes from the December meeting showed a growing reticence about further increases in the central bank's $2.9 trillion balance sheet, which it expanded sharply in response to the financial crisis and recession of 2007-2009.
Stocks had pushed the benchmark S&P 500 index 4.3 percent higher during a two-day run as investors turned their focus to upcoming battles in Congress, including likelihood of bitter fights over spending cuts and raising the federal debt ceiling.
"As we look down the pathway here, there are some real issues in front of the market. There is going to be a new battle in two months over the debt ceiling and sequestration and fourth-quarter earnings are going to start to come into focus," said Stephen Massocca, managing director at Wedbush Morgan in San Francisco.
"There are some issues out there that could hold this market back, but on the other side of the ledger, zero interest rates are a tremendous stock market flotation device."
The rally in equities began on the last day of 2012 on optimism a deal would be reached to avert the "fiscal cliff," and avoid a possible recession. Gains continued on Wednesday, the first trading day of 2013, with Wall Street's best performance since Dec. 20, 2011 after Congress approved a fiscal compromise.
Retailers advanced after several major companies in the sector beat expectations of modest sales increases in December, with the S&P retail index up 0.8 percent and the Morgan Stanley retail index up 0.6 percent.
The Dow Jones industrial average dropped 17.47 points, or 0.13 percent, to 13,395.08. The Standard & Poor's 500 Index shed 2.30 points, or 0.16 percent, to 1,460.12. The Nasdaq Composite Index dipped 5.19 points, or 0.17 percent, to 3,107.07.
Economic data showed U.S. private-sector employers shrugged off a looming budget crisis and stepped up hiring in December, offering further evidence of underlying strength in the economy as 2012 ended.
The government's broader monthly payrolls report, due on Friday, is expected to show the economy created 150,000 jobs compared with 146,000 in November, according to a Reuters poll. The U.S. unemployment rate is seen holding steady at 7.7 percent.
Retailers advanced after several major companies in the sector beat expectations of modest sales increases in December, with the S&P retail index up 0.8 percent and the Morgan Stanley retail index up 0.6 percent.
Shares in Costco Wholesale Corp rose 1.4 percent to $102.85 after the company reported a better-than-expected 9 percent rise in December sales at stores open at least a year.
Gap Inc stock climbed 3.1 percent to $32.33 following news that the retailer will buy women's fashion boutique Intermix Inc, the Wall Street Journal reported.
Family Dollar Stores Inc stumbled 12 percent to $56.38 on the company's report of lower-than-expected quarterly profit.
NYMEX - NEW YORK, Jan 3 (Reuters) - U.S. crude futures edged lower on Thursday, faltering after the previous session's 1.4 percent rally, traders and analysts said, as looming budget battles in Washington tempered optimism about the deal to avert the automatic tax hikes and spending cuts considered a threat to economic growth.
Late in the session, crude futures felt pressure when minutes from the latest policy meeting revealed signs of growing concern by the U.S. Federal Reserve about buying bonds to spur economic growth.
CBOT Soybean - Soybean futures on the Chicago Board of Trade fell for a third
straight session, with the bellwether March contract touching a six-week low after China canceled orders of U.S. soybeans, traders said.
USDA said China canceled purchases of 315,000 tonnes of U.S. soybeans for delivery in 2012/13. The move follows Chinese cancellations of purchases totaling 840,000 tonnes in the week of December 16.
· Also bearish, USDA's attache in Brazil raised its estimate of Brazil's 2012/13 soybean production to a record-large 83 million tonnes, above USDA's last official forecast of 81 million tonnes.
· Additional pressure from strength in the U.S. dollar, which firmed after minutes from the Federal Reserve's latest meeting showed rising concern about the Fed's policy of buying bonds to stimulate growth. The policy has helped to buoy equity and commodity markets.
· CBOT soymeal fell for a sixth day, with the front contract dipping below below $400 a ton for the first time in seven months.
· CBOT March soyoil ended lower on profit-taking after Wednesday's 2.7 percent jump, halting a four-session rally.
· Trade expects USDA to report weekly export sales of U.S. soybeans on Friday at 250,000 to 450,000 tonnes. The report was delayed by a day due to the New Year's Day holiday.
· CBOT reported nine soymeal deliveries against January futures, 2,754 soyoil deliveries and no soybean deliveries.
FCPO - SINGAPORE, Jan 3 (Reuters) - Malaysian palm oil futures edged lower on Thursday after prices climbed to a two-month high the previous day, although hopes of a new export tax structure boosting demand had curbed losses.
The tropical oil started the year strongly by jumping to its highest since Nov. 2 on Wednesday after the United States reached a fiscal deal that prevented the world's largest economy from slipping into recession.
Market players are eyeing Malaysia's Jan. 1-10 exports data due next week, expecting higher demand from crude palm oil as the country imposed a zero percent duty in January for shipments of the grade.
"We see a bit of profit-taking coming in. Every time we go above 2,500 ringgit, there's no strong follow through," said a trader with a foreign commodities brokerage in Malaysia.
"The important issue now is with the new export tax structure and traders want to see how Malaysian exports will be for the first 10 days. Prices should be trading in a range of 2,450-2,550 ringgit."
At market close, the benchmark March contract on the Bursa Malaysia Derivatives Exchange fell 1.0 percent to 2,475 ringgit ($816) per tonne. Prices hit a two-month high of 2,524 ringgit on Wednesday.
Total traded volumes stood at 36,244 lots of 25 tonnes each, higher than the usual 25,000 lots.
Technicals appear to be bearish as palm oil is expected to retrace to 2,452 ringgit based on a wave analysis, Reuters market analyst Wang Tao said.
But prices may find support as lower December production and disruption to supply due to heavy rains could help ease record-high stocks of 2.56 million tonnes, traders said.
Industry regulator the Malaysian Palm Oil Board will release official data on December's stocks and output next week.
Investors are monitoring the impact of China starting to enforce its quality standards on edible oil imports. Palm oil which fails to make the grade could see cargoes turned away from Chinese ports, depressing demand a little.
Brent crude dropped below $112 a barrel on Thursday as the prospects of more budget battles in the United States and rising oil supply weighed on prices, although upbeat economic data from China limited losses.
In competing vegetable oil market, U.S. soyoil for March delivery fell 0.2 percent in late Asian trade. China's Dalian Commodities Exchange is closed for the New Year holiday and will resume trading on Friday.
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