U.S. stocks fell after meeting minutes indicated that Federal Reserve officials in October stuck to the view that the central bank might begin winding down bond purchases in the "coming months." The Dow Jones Industrial Average closed down 66.21 points, or 0.4%, at 15900.82 after the release of minutes from the Oct. 29-30 meeting of the Fed's policy-making committee were released. The S&P 500-stock index shed 6.50 points, or 0.4%, to 1781.37. The Nasdaq Composite Index was down 10.28 points, or 0.3%, to 3821.27.
Existing-home sales fell by more than expected, a sign that rising interest rates are weighing on the housing recovery. A home for sale in Seattle. Bloomberg News
Other financial markets that have been supported in recent years by the Fed's $85 billion-a-month bond-buying program also weakened, as the minutes reinforced many investors' expectations of a scaling back, or tapering. Treasury yields, which move in the opposite direction of prices, hit a two-month high. Gold prices fell to a fresh four-month low.
"Collectively, they're all saying the same thing, which is that tapering is clear and present," said Mark Luschini, chief investment strategist with Janney Montgomery Scott. "A market that has clearly been addicted to the liquidity that this bond-buying has provided can't be weaned off it without some reaction."
While the Fed's bond-buying program could start to wind down in coming months, strategists note that the central bank isn't expected to raise interest rates for some time. Late Tuesday, Fed Chairman Ben Bernanke said that short-term interest rates may stay low well after the jobless rate falls below 6.5%.
Still, Mr. Luschini said, his firm has raised cash levels in funds that are able to hold cash. "It isn't that we fear a substantial pullback, but… the market is due to rest."
The S&P 500-stock index is up 25% so far this year.
Some investors said Wednesday that perceived changes in the timing of the Fed's move haven't changed their outlook.
"Our takeaway is that nothing really has changed," said Kristina Hooper, U.S. investment strategist at Allianz Global Investors, which has $409 billion in assets under management. She thinks that economic data hasn't supported a Fed tapering until early next year, and says stocks should be able to continue to gain. But she warned that after the year's strong gains, stock prices in the U.S. are "a little bit stretched," so trading could become more volatile.
Economic data gave a boost to stocks in morning trading, though declines in overseas markets provided a downbeat backdrop. Supporting investors' optimism on economic growth were U.S. retail sales figures, which rose 0.4% while expectations were for 0.1%, and inventory levels, which jumped 0.6% while a 0.3% rise was forecasted.
Inflation and existing-home sales data fell short of expectations. But strategists said those reports could support markets as they don't provide extra pressure for the Fed to tighten policy. The consumer-price index, a measure of inflation, fell 0.1%, while it was expected to remain unchanged. Excluding energy and food prices, it rose 0.1%, in line with forecasts.
Existing-home sales fell by more than expected, dropping 3.2% while a drop of 2.6% was forecast, another sign that rising interest rates are weighing on the housing recovery.
The effect of higher rates on the U.S. housing market is "one of the things that keeps the Fed on hold," said Mr. O'Rourke.
Treasury prices fell after the Fed minutes were released, pushing yields on the 10-year note up to settle at 2.795%. Before the release, the yield was trading at 2.746%. Gold futures dropped as much as 1.6% right after the minutes, bringing the losses since Tuesday to 2.6%. The contract for November delivery settled down 1.2% on the day at $1,257.90 a troy ounce.
The dollar strengthened to session highs against the euro following the report. The euro fell to as low as $1.3584 following the minutes, compared with around $1.344 beforehand, according to data provider EBS via CQG.
Crude-oil futures for December delivery were little changed, dipping less than 0.1% to settle at $93.33 a barrel.
European markets were mixed, with the Stoxx Europe 600 closing up 0.1%. The index turned sharply higher after a report that the European Central Bank is considering a cut to its deposit rate into negative territory, but then pared much of those gains. The index is up 17% from its low this year.
Asian market benchmarks were mostly lower, though Hong Kong's Hang Seng Index gained 0.2% and China's Shanghai Composite rose 0.6%. Stocks in Hong Kong and China have rallied in recent days after China's leadership introduced a wide range of proposals to eventually loosen some controls on the country's economy.
In corporate news, J.C. Penney JCP -3.27% shares rallied after the department store reported its latest earnings results. It missed expectations for both profits and sales, but shareholders found signs of progress in the report, as its chief executive reiterated that it expects a rise in same-store sales for the fourth quarter. Shares are still down 52% so far this year.
Lowe's declined after its latest results. The company raised its outlook for full-year earnings but narrowly missed Wall Street's forecast for its quarterly profit. Its shares are up 35% this year.
Write to Alexandra Scaggs at alexandra.scaggs@wsj.com