While you were sleeping: Fed's mixed message

Wall Street declined, pushing the Dow Jones Industrial Average down from a record high, as investors assessed comments by US Federal Reserve policy makers for clues about its monetary stimulus program.

Federal Bank Dallas President Richard Fisher warned that the Fed's monetary stimulus program would not last indefinitely.

"We've changed and impacted the markets because of our intervention and I understand there's sensitivity, but markets should also bear in mind that this program cannot go on forever," Fisher, who is in Melbourne speaking at an Economic Development for Australia function, told CNBC.

In afternoon trading in New York, the Dow Jones Industrial Average fell 0.3 percent, the Standard & Poor's 500 Index dropped 0.39 percent, while the Nasdaq Composite Index declined 0.29 percent.

Shares of Travelers, last down 1.8 percent, and Walt Disney, 1.2 percent weaker, led the Dow lower, while shares of Cisco, up 1.6 percent, and Home Depot, up 0.9 percent, posted the largest gains.

Meanwhile, Minneapolis Fed Bank President Narayana Kocherlakota said "an unemployment rate of 7.3 percent means that the US labour market is far from healthy".

"Over six years after the national unemployment rate first began its ascent, the labour market remains disturbingly weak," Kocherlakota told the St Paul Chamber of Commerce in Minnesota.

"The good news is that, with low inflation, the FOMC has considerable monetary policy capacity at its disposal with which to address this problem. The FOMC's test today is to figure out how best to deploy this capacity. The answer lies in taking two steps. The first step is to communicate that our goal is to accomplish a fast return to maximal employment while keeping inflation close to, although possibly temporarily above, the target of 2 percent. The second step is to do whatever it takes, on an ongoing basis, to achieve that goal," Kocherlakota said.

"[D]oing whatever it takes will mean keeping a historically unusual amount of monetary stimulus in place-and possibly providing more stimulus."

Atlanta Fed Bank President Dennis Lockhart said he expects US growth to accelerate to "the range of 2-1/2 to 3 percent" in 2014 and predicted "full-year 2013 [GPD] is likely to come in closer to 2 percent".

"The economy is growing at a slow pace. Even with that slow growth, substantial progress has been made on the employment front, but there is more to be done. At the same time, inflation is too low, and that carries some risk of a weakening economy," Lockhart told the Annual Business and Economic Summit in Montgomery, Alabama.

"I expect things to pick up in 2014, but it's possible the economy will stay on its current track and we'll see no acceleration. The right monetary policy for these circumstances is continued strong stimulus," according to Lockhart. "That is not to say, however, that the mix of policy tools needs to or will stay the same."

Economists forecast the Fed will delay tapering asset purchases until the March 18-19 meeting; they will probably ease the monthly pace of bond buying to US$70 billion at that time, according to a Bloomberg survey on November 8. The next two-day FOMC meeting starts December 17.

In Europe, the Stoxx 600 Index sank 0.6 percent, as did France's CAC 40. Germany's DAX fell 0.3 percent, while the UK's FTSE 100 Index edged nearly 0.1 percent lower.

(BusinessDesk)