Investors bummed out by Fed minutes’ lack of stimulus plans

NEW YORK — Stocks fell Tuesday, a day after the Standard & Poor’s 500 index rose to the highest level since 2008, as minutes from the Federal Reserve’s latest policy meeting damped expectations for more monetary stimulus.

Companies whose earnings are most tied to economic swings led the retreat, with S&P 500 indexes tracking energy, financial and raw-materials stocks falling at least 0.7%.

The S&P 500 lost 5.66 points, or 0.4%, to 1413.38. The Dow Jones industrial average lost 64.94 points, or 0.5%, to 13,199.55 after reaching the highest level since December 2007 on Monday. The Nasdaq composite index slid 6.13 points, or 0.2%, to 3113.57.

“Everybody would like a little more stimulus,” says James Dunigan, chief investment officer for PNC Wealth Management. “It reiterates what (Fed Chairman Ben Bernanke has) been saying that they saw continuously moderate economic growth, and they stand ready to do something, but at the moment, there’s no immediate need to do any additional stimulus.”

Stocks extended losses as the minutes of the March 13 meeting showed a decreased urgency to add monetary stimulus. The Fed indicated that it is holding off on increasing monetary accommo- dation unless the U.S. economic expansion falters or prices rise at a rate slower than its 2% target. The central bank last month affirmed its plan, first announced in January, to hold interest rates near zero through late 2014.

Stocks fell earlier as figures from the Commerce Department showed factory bookings in February rose 1.3% after a revised 1.1% decline in January. The median of 60 economists’ projections in a Bloomberg News survey called for a 1.5% advance.

The S&P 500 on Monday climbed to the highest level since May 2008 after a report showed stronger-than-forecast growth in U.S. manufacturing. The index rose 12% from January through March for the best first-quarter rally since 1998 as economic data surpassed estimates, and investors speculated that the eurozone would contain its sovereign-debt crisis.

“The market is over-optimistic about corporate profit and GDP growth for the rest of the year,” says David Pearl, co-chief investment officer at Epoch Investment Partners. “We’re in a recovery, but the market has pretty much discounted that.”