Wall Street had eagerly anticipated the minutes from the Fed's May 3 meeting, hoping for a clearer picture of the strength of the economy and the prospects for inflation. In the minutes, the Fed noted a risk of inflation as well as an economic slowdown, but said that those pressures remained in check and that interest rates could be increased slowly.

Recent economic data, however, showed a moderation in prices and inflation risk, as well as increased strength in the economy. But since higher interest rates serve to moderate growth as well as stem inflation, the Fed made the right call, said Lincoln Anderson, chief investment officer at LPL Financial Services.

"The Fed got it right, but for the wrong reasons," Anderson said. "But they should be (raising rates) anyway. The economy seems pretty strong right now, and the Fed is moving on rates at what seems to be a good pace. And that's good for the market."

The Dow Jones industrial average fell 19.88, or 0.19 percent, to 10,503.68.

Broader stock indicators edged higher. The Standard & Poor's 500 index was up 0.21, or 0.02 percent, at 1,194.07, and the Nasdaq composite index gained 4.97, or 0.24 percent, to 2,061.62.

Crude oil futures rose as investors digested mixed signals from OPEC regarding crude production. A barrel of light crude settled at $49.67, up 51 cents, on the New York Mercantile Exchange.

Bonds continued their recent rally, with the yield on the 10-year Treasury note falling to 4.03 percent from 4.07 percent late yesterday. The dollar was mixed against other major currencies, while gold prices fell.

In economic news, the National Association of Realtors reported a 4.5 percent increase in existing home sales, which rose to an annualized rate of 7.18 million homes in April, compared to 6.87 million in March. Analysts had expected a more modest rate of 6.9 million. Home prices rose 15.1 percent year-over-year, raising concerns that the housing market "bubble" may eventually burst as more people are unable to afford homes.

But despite the economic data and the Fed minutes — with the accompanying worries over future interest rate hikes — the stock market remained surprisingly resilient, analysts said, with even today's bout of profit taking insufficient to cut deeply into the market's gains.

"You're going to see some ups and downs now that we're at these higher levels, but we won't fall too far," said Bill Groenveld, head trader for vFinance Investments. "Any time we fall, you're going to get people who missed out on last week jumping back in to buy at a lower level, and that'll create the support we need to get this market ticking higher through the summer."

In corporate news, Raytheon Co. gained 12 cents to $39.17 after it won a $3 billion contract from the U.S. Navy to develop radar, weapons and electronics systems for a new class of high-tech destroyers.

Scottish Power PLC rose $1.85 to $34.21 after it agreed to sell Northwest power utility PacifiCorp to a Berkshire Hathaway subsidiary for $9.4 billion in cash, debt and stock. Class A shares of Berkshire Hathaway rose $2,010 to $85,500.

General Motors Corp. slid 90 cents to $31.69 as the Dow component's bonds received another downgrade, this time from Fitch Ratings. The bond rating service said the company's outlook remains negative due to sluggish sport utility vehicle sales and increased truck competition.

Pharmaceutical developer Genentech Inc. said that an experimental treatment for common, age-related eye diseases had strong clinical trial results. The drug was shown to help 95 percent of patients. Genetech gained $2 to $78.60.

Rival Eyetech Pharmaceuticals Inc. plunged 46 percent, or $11.02, to $12.95 as Merrill Lynch & Co. downgraded the company's stock in response to Genentech's announcement. The brokerage said Genentech's drug may have better long-term efficacy than Eyetech's product.

Home products retailer Williams-Sonoma Inc. posted a 22 percent rise in quarterly profits, boosted by strong sales and back orders. The company also beat Wall Street profit expectations by 3 cents per share. Williams-Sonoma was up 15 cents at $37.87.

Declining issues outnumbered advancers by nearly 5 to 4 the New York Stock Exchange, where preliminary consolidated volume came to 1.77 billion shares, compared with 1.68 billion yesterday.

The Russell 2000 index of smaller companies was up 0.08, or 0.01 percent, at 612.95.