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Market dips as Fed caution offsets earnings cheer


    By Jennifer Coogan

    NEW YORK (Reuters) - Stocks traded slightly lower on Wednesday, after early gains from positive earnings results in the media sector were overshadowed by comments from Fed officials that cast doubt on the outlook for more interest rate cuts.

    Macy's Inc added to pessimism late in the session after it released dismal sales figures, raising anxiety about Thursday's wave of sales results from a slew of other retailers.

    Two Federal Reserve Bank presidents made comments about the need for policy-makers to remain vigilant against quickening inflation pressure this year, even as the economy slows sharply.

    The comments may cast some doubts on the Fed's ability to keep cutting interest rates. Traders had speculated earlier in the week that the Fed would need to make another emergency interest rate cut following surprisingly negative reports on job creation and service-sector growth.

    "I think they're just trying to temper the comments that you've been seeing in the last few days that the Fed needs another intermeeting cut," said Subodh Kumar, chief investment strategist, Subodh Kumar & Associates in Toronto. "The Fed is still going have an accommodative policy, but the market is responding to this uncertainty."

    The Dow Jones industrial average was up 8.45 points, or 0.07 percent, at 12,273.58. The Standard & Poor's 500 Index was down 0.56 point, or 0.04 percent, at 1,336.08. The Nasdaq Composite Index was down 6.88 points, or 0.30 percent, at 2,302.69.

    Macy's shares were down 3.3 percent at $24.75 after the department store chain said sales at stores open at least one year fell 7.1 percent last month.

    Stocks had started the session higher after financial results from Walt Disney Co and Time Warner Inc fed optimism that companies outside the financial sector have performed well.

    Shares of Disney jumped 5 percent to $31.55 on earnings that topped Wall Street estimates, while Time Warner shares rose more than 3.1 percent to $15.87 after it said it expects profit growth to match or beat Wall Street expectations.

    (Reporting by Jennifer Coogan; editing by Gary Crosse)