Daily Data Flow: U.S. Stocks Fall; Private Sector Jobs Surge; Fed Is Wary of Stimulus Side Effects

U.S. Stocks Fall as Fed Sees Bond Buying Ending in 2012 (Bloomberg)
U.S. stocks fell, erasing earlier gains, after Federal Reserve policy makers said at the latest meeting they probably will end their $85 billion monthly bond-purchase program sometime in 2013. “Concern that they’re taking the punch bowl away could certainly cause some jitters in the market,” James Gaul, a portfolio manager at Boston Advisors LLC said. “The sell-off sits with what we’ve been thinking, which is that this has been a Fed-supported rally. The liquidity the Fed has been providing to generate financial asset inflation has been driving the market.”

Private Sector Jobs Surge, Weekly Claims Rise (CNBC)
The jobs market saw mostly good news Thursday, with a big increase in private sector hiring helping offset an uptick in weekly jobless claims. The government said the number of people filing claims for weekly unemployment aid rose to 372,000, a number it said could have been distorted by the winter holiday season. In a separate report, the private sector created 215,000 new jobs in December, a much stronger than expected number boosted by gains in construction hiring. “The most surprising thing is that despite all the brinkmanship over the fiscal cliff and the debate about that, businesses didn’t change their hiring plans,” Moody’s Analytics’ chief economist Mark Zandi said. “They seemed to slow up their investment spending but not on their hiring, so that’s very, very encouraging.”

Fed Becoming Worried about Stimulus Side Effects (Reuters)
Federal Reserve officials are increasingly concerned about the potential risks of the U.S. central bank’s asset purchases on financial markets, even if they look set to continue an open-ended stimulus program for now. In a surprise to Wall Street, minutes from the Fed’s December policy meeting, published on Thursday, showed a growing reticence about further increases in the central bank’s $2.9 trillion balance sheet, which it expanded sharply in response to the financial crisis and recession of 2007-2009. “Several (officials) thought that it would probably be appropriate to slow or to stop purchases well before the end of 2013, citing concerns about financial stability or the size of the balance sheet,” the minutes said, referring to the narrower group of voting Fed members.