NEW YORK (CNNMoney.com) -- Stocks ended little changed Wednesday as meeting minutes from the Federal Reserve raised concerns about the economy after Intel's earnings strength renewed optimism about corporate results.
Stocks staged a modest rally early in the session on optimism about second-quarter corporate profits. But the advance faded after the central bank released minutes from its June policy meeting.
The minutes showed that Fed officials have a more pessimistic view of the economy, stoking fears about a slowdown in the second half of the year.
However, technology shares bucked the trend. The sector was supported by strong quarterly results and a bullish sales outlook from Intel (INTEL) on Tuesday.
Strong earnings and upbeat guidance from aluminum giant Alcoa (AA, Fortune 500) and transportation company CSX (CSX, Fortune 500) boosted the market Tuesday. Last week, the market booked its best weekly gain in a year on speculation the second-quarter earnings period will beat expectations.
But traders said the tone was more cautious Wednesday, with several more companies due to post results this week. A dour report on retail sales and a big drop in mortgage applications also weighed on the market.
"At the moment the economic news is trumping the earnings news," said Mark Luschini, chief investment strategist at Janney Montgomery Scott.
Earnings news could be back in focus early Thursday when JPMorgan Chase (JPM, Fortune 500) reports second-quarter results before the market opens. Analysts surveyed by Thomson Financial expect the bank to report a profit of 70 cents per share, up from 28 cents per share a year ago.
"If the financial's participate and we have good earnings, we're going to move higher," said Dave Rovelli, managing director of U.S. equity trading at Canaccord Adams.
On the economic front, reports due Thursday include weekly initial jobless claims, consumer and wholesale inflation data as well as a regional manufacturing report.
Fed: According to the minutes of their June meeting, Fed officials discussed contingency plans to further stimulate the economy "if the outlook were to worsen appreciably."
The minutes also showed that the central banker reduced its outlook for U.S. gross domestic product. GDP is now projected to grow between 3.0% and 3.5% this year, down from an earlier forecast of 3.2% to 3.7%. In the first quarter, GDP rose at an annual rate of 2.7%.
In addition, the Fed predicts the unemployment rate will range between 9.2% to 9.5% this year, slightly worse than the 9.1% to 9.5% range it forecast in April. Unemployment was 9.5% in June, but has averaged 9.7% over the first half of the year.
"The Fed believes that the economy has recovered from disaster but is still extremely weak," said Doug Roberts, chief investment strategist for Channel Capital Research. "There is virtually no danger of higher rates in the near future."
Earnings: Some 21 S&P 500 companies will announce results this week, with most of the rest spread out over the next three weeks.
Second-quarter earnings are expected to be up 27%, according to trackers at Thomson Reuters. But investors are particularly focused on what corporate leaders expect for the second half of the year.
"Earnings have been quite outstanding, and the market has been in pretty good shape lately, but markets can't like everything about all the earnings reports," said Robert Brusca, chief economist at Fact and Opinion Economics. "At some point you're going to have to look for this to settle down."
Economy: The Commerce Department said retail sales fell 0.5% in June after dropping 1.1% in May, while sales excluding autos slipped 0.1%.
Economists surveyed by Briefing.com expected total sales to have fallen 0.2%, and sales excluding autos were forecast to have held steady after falling 0.8% in May.
Separately, mortgage applications fell last week to their lowest level in more than 13 years, according to the Mortgage Bankers Association.
World markets: European shares were mixed in active trading. Britain's FTSE 100 slipped 0.3% and France's CAC 40 fell 0.1%. The DAX in Germany gained 0.3%
In Asia, Japan's Nikkei surged 2.7%, the Shanghai Composite added 0.8% and the Hang Seng in Hong Kong rose 0.6%.
Currencies: The dollar rose against its main trading partners, including the euro, the British pound and the Japanese yen.
Commodities: U.S. light crude oil for August delivery fell 16 cents to settle at $76.99 a barrel.
COMEX gold's August contract fell $3.80 to $1,209.60 per ounce.
Bonds: Treasury prices rose, and the yield on the 10-year note fell to 3.05%. Bond prices and yields move in opposite directions.
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|Overnight Avg Rate||Latest||Change||Last Week|
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