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NEW YORK - US stocks tumbled today as minutes from last month's Federal Reserve meeting hinted at the need for more rate hikes, adding to worries about surging petrol futures contract prices and signs of housing market troubles.
The Dow industrials were on track to end an eight-day streak of gains. Citigroup Inc. helped pull down the Dow after the bank said it will eliminate 17,000 jobs, or 5 per cent of its work force. The restructuring news had been expected for several weeks and helped push Citigroup's shares up 7.5 per cent since mid-March.
The Federal Reserve, according to the minutes from its March 20-21 policy meeting, believed that weaker-than-expected economic indicators and "uncomfortably high" readings on inflation suggested greater risks of slower economic growth as well as greater uncertainty that core inflation would recede as expected.
"What the minutes did is bring (investors) back to reality, to the fact that if things continue and there are inflationary pressures, the Fed isn't going to allow that," said Doug Roberts, founder and chief investment strategist at Channel Capital Research, in Shrewsbury, New Jersey.
The Dow Jones industrial average was down 92.81 points, or 0.74 per cent, at 12,481.04. The Standard & Poor's 500 Index was down 9.58 points, or 0.66 per cent, at 1,438.81. The Nasdaq Composite Index was down 20 points, or 0.81 per cent, at 2,457.61.
Up until yesterday, the Dow had its longest string of positive finishes in four years, although the increases in several sessions were modest.
US government data showed a larger-than-expected drop in petrol supplies last week, which pushed futures to an eight-month high.
Shares of Citigroup lost 1.3 per cent to US$51.71, while the S&P financial index dropped 0.8 per cent.
The stocks of other companies in the financial and housing-related sectors fell after the National Association of Realtors said tougher lending standards will slow the recovery in the US housing market and data showed a fourth-straight weekly decline in US mortgage applications.
The Dow Jones US Home Construction index was down 2.1 per cent.
The housing slump will likely slow the US economy, but will not trigger a recession, the International Monetary Fund said. The IMF lowered the forecast it made in September for 2007 GDP expansion to 2.2 per cent from 2.9 per cent.
- REUTERS