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US stocks slip as Federal Reserve discusses stimulus; Facebook hits all-time high

A man looks at an electronic stock board of a securities firm in Tokyo, Tuesday, Dec. 17, 2013. Most Asian stock markets edged up Tuesday, with some indexes regaining slight losses after opening in directionless trading ahead of the U.S. Federal Reserve meeting. (AP Photo/Koji Sasahara)
December 17, 2013 - 11:02 AM

NEW YORK, N.Y. - Stocks edged lower in early afternoon trading Tuesday as the Federal Reserve begins a two-day policy meeting.

Good news on the U.S. economy this month, including a blockbuster jobs report and a budget deal in Washington, appeared to increase the likelihood that the Fed could pare back its huge bond-buying program as early as this week. Investors find out Wednesday, at the end of the Fed's last meeting of the year.

KEEPING SCORE: The Standard & Poor's 500 index fell four points, or 0.3 per cent, to 1,781 as of 1:32 p.m. (1832 GMT). The Dow Jones industrial average fell 17 points, or 0.1 per cent, to 15,867. The Nasdaq composite fell three points, or 0.1 per cent, to 4,026.

REVENUE FEED: Facebook hit a record high of $55.18 after it tested video advertisements for users' news feeds, a potential source of revenue.

POSTING GAINS: 3M climbed $3.08, or 2 per cent, to $130.74 after raising its dividend by 35 per cent. The maker of Post-it notes also forecast solid earnings next year.

THE FED EFFECT: The stock market has surged this year as the Fed keeps buying $85 billion in bonds every month to keep long-term interest rates low. The economy has steadily improved and companies have been making more money. That has helped push the S&P 500 index up almost 25 per cent, putting it on track for its best performance in a decade.

ROOM FOR OPTIMISM: The strong economy and healthy earnings provide a good backdrop for stocks, says Liz Ann Sonders, chief investment strategist at Charles Schwab. "Dips that we get are not going to be terribly severe," Sonders says.

NO CORRECTION: The S&P 500 has gone without a correction, defined as a decline of 10 to 20 per cent, since October 2011.

BIGGEST WINNERS: Frontier Communications rose the most in the S&P 500. Shares surged 35 cents, or 8 per cent, to $4.75 after the company reached a deal to acquire AT&T's fixed-line business in Connecticut for about $2 billion.

AND LOSERS: Delta Air Lines fell the most, down 94 cents, or 3 per cent, to $26.98.

FLAT PRICES: U.S. consumer prices remained flat in November, held down by falling gas prices. The consumer price index fell 0.1 per cent in October.

OTHER MARKETS: The yield on the 10-year Treasury note dropped to 2.85 per cent from 2.88 per cent on Monday. The price of gold fell $16, or 1 per cent, to $1,228 an ounce.

ON DECK: The Fed will also release economic projections and hold a news conference on Wednesday. Several big U.S. companies are due to report quarterly earnings this week, including FedEx, Oracle Corp and Neiman Marcus.

News from © The Associated Press, 2013
The Associated Press

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