Stocks clawed back from their worst levels but still ended in negative territory Tuesday following the latest Fed meeting minutes that showed policymakers toned down the likelihood for further quantitative easing.
The Dow Jones Industrial Average fell 64.94 points, or 0.49 percent, to close at 13,199.55, snapping a three-day winning streak, led by BofA and H-P . Still, the blue-chip index recovered from its triple-digit loss earlier in the session.
The S&P 500 erased 5.66 points, or 0.40 percent, to end at 1413.38. The Nasdaq slipped 6.13 points, or 0.20 percent, to finish at 3,113.57.
The CBOE Volatility Index, widely considered the best gauge of fear in the market, ended above 15.
Most key S&P sectors ended in negative territory, led by energy and materials.
Stocks were lower for most of the session, but immediately tumbled 1 percent across the board after minutes from the Fed's latest meeting in March suggested that policymakers' appetite for another dose of quantitative easing significantly decreased, amid the improving U.S. economy. At the same time, members of the Federal Reserve remained cautious about a broad recovery, especially on the jobs front.
Stocks eventually recovered from their lows as traders and investors digested the announcement.
“The minutes seem negative on the surface [but] I’d be cautious into reading too much into these comments,” said Sal Arnuk, co-manager of trading at Themis Trading. “Then again, you don’t need too much to push the market around on a day like this…we also seem to be consolidating from last quarter’s big move.”
Arnuk also noted that the Fed is unlikely to make dramatic moves in its policy during an election year that could rattle markets.
Meanwhile, shares of insurance companies including Allstate and Progressive declined after several tornadoes ripped through the Dallas-Fort Worth area.
Among autos, GM posted monthly sales that jumped 11.8 percent, but still missed expectations, sending shares of the American auto maker lower. Rival Ford climbed after the firm posted sales that gained 5 percent. And Toyota posted a 15 percent gain in sales.
Banks were lower even after some brokerages raised their price targets on major financials.
KBW boosted its price target on Goldman Sachs , Morgan Stanley and JPMorgan . Macquaire also boosted its target price on JPMorgan to $55 from $52.
Among techs, Apple gained after JPMorgan raised its price target on the iPad maker to $715 from $625. In addition, Piper Jaffray lifted its price target on the firm to $910 from $718, but added the shares will reach $1,000 by 2014.
Research In Motion said it will provide software to companies that would open up its secure network to iPhones and other mobile gadgets in a move intended to encourage customers to stick with its services, even if they move away from the BlacKBerry smartphones. (Watch:RIM Will Be 'Out of Business')
Netflix slipped after Barclays downgraded the online movie streaming company to "equal weight" from "overweight," amid increasing competitive threats in the subscription video on demand market.
Qualcomm boosted its quarterly dividend by 16 percent to $0.25 from $0.215.
Urban Outfitters rallied after Citigroup raised its rating on the apparel retailer to "neutral" from "sell."
GlaxoSmithKline will file its once-weekly diabetes drug for regulatory approval, following favorable results from clinical trials.
On the economic front, factory orders rebounded 1.3 percent in February, according to the Commerce Department. Still, the reading was below the 1.5 percent gain expected by economists in a Reuters poll.
—Follow JeeYeon Park on Twitter: @JeeYeonParkCNBC—
Coming Up This Week:
WEDNESDAY: Weekly mortgage apps, Challenger job-cut report, ADP employment report, ISM non-mfg index, oil inventories, Fed's Williams speaks, JPMorgan's annual letter to shareholders released; Earnings from Monsanto, Bed Bath & Beyond
THURSDAY: Jobless claims, Fed's Bullard speaks, chain-store sales, Yahoo board members' 1st day; Earnings from CarMax
FRIDAY: Good Friday—markets closed/banks open, non-farm payrolls, consumer credit
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