U.S. stock indexes trimmed losses Wednesday to trade at session highs after the release of minutes from the Federal Reserve’s July policy meeting.
How are stocks trading
The Dow Jones Industrial Average
DJIA,
-0.07%
was down 94 points, or 0.3%, at 34,058.
The S&P 500
SPX,
-0.20%
dropped 20 points, or 0.5%, to 4,285.
The Nasdaq Composite
COMP,
-0.56%
declined 118 points, or 0.9%, to 12,984.
On Tuesday, the Dow rose 240 points, or 0.7%, while the S&P 500 advanced 0.2% to close at its highest since late April, while the Nasdaq slipped 0.2%.
What’s driving markets?
Minutes of the July 26-27 meeting, at which policy makers delivered a 75 basis point rise, said that Fed officials worried about the “significant risk” that elevated inflation could become entrenched if the public began to question the Fed’s resolve to hike rates by a sufficient amount to rein in inflation.
On the other hand, “many” Fed officials said they were worried about the risk that the Fed could tighten the stance of monetary policy by more than was necessary.
Ahead of the minutes, the appetite for additional risky bets was seen waning as investors took time out to assess the strong summer surge that powered the stock market to three-month high.
Hopes that inflation may have peaked and that the Fed thus may be able to avoid delivering a hard economic landing has pushed the S&P 500 up 17.4% from its mid-June low, and left the benchmark challenging its 200-day moving average for the first time since April.
“The index traded above its 200-DMA twice this year, once in early February, then late March, but couldn’t hold on to the gains and rapidly sold off,” noted Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
“We will see if the third time is a charm; earnings and the FOMC minutes will be decisive for the short-term direction,” she added.
Source: BNP Paribas
See: Stock-market rally faces key challenge at S&P 500’s 200-day moving average
Earlier, investors received more clues as to the health of the U.S. consumer. Following better-than-expected results on Tuesday from Walmart
WMT,
+0.27%
and Home Depot
HD,
+0.09%,
it was the turn of retailing peers Target
TGT,
-2.07%
and Lowe’s
LOW,
+1.19%
to deliver earnings. Target’s numbers disappointed, after higher markdowns led to lower margins, but Lowe’s figures were well-received.
“In the wake of Walmart and Home Depot, I think Wall Street had much higher expectations for Target,” Navellier said in an interview.
“We believe kind of a rally in technology was hopeful, kind of Fed pivot and that we’re near the end of interest rate tightening cycle,” said Andy Tepper, managing director at BNY Mellon Wealth Management on Wednesday. “And quite frankly, we think that may be a little bit premature, that there still is some worrisome stickier inflation that the Federal Reserve needs to deal with.”
In economic data, U.S. retail sales were unchanged overall in July, though largely due to falling gasoline prices and fewer purchases of new cars and trucks. Economists polled by Dow Jones Newswires and The Wall Street Journal forecasted a 0.1% growth.
Retail sales minus autos rose 0.4% in July, while retail sales excluding autos and gas climbed 0.7% in July.
“We got another data point this morning confirming what we already know; the U.S. economy is not currently in recession,” Cliff Hodge, Chief Investment Officer, Cornerstone Wealth, in Charlotte NC, wrote. “Consumers remain resilient in the face of sticky inflation. The beat on the Retail Sales Control Group is a harbinger for economic reacceleration in the third quarter as it flows directly into GDP, but in an environment where good economic news is bad news for markets the argument for a new bull market is further diminished.”
See: Stock-market rally faces key challenge at S&P 500’s 200-day moving average
Shares of Target Corp.
TGT,
-2.07%
slumped 2% Wednesday, after the discount retailer reported fiscal second-quarter profit that fell well short of expectations, as higher markdown rates led to lower gross margins, but revenue that topped forecasts.
Shares of TJX Companies
TJX,
+4.34%
gained 4% Wednesday, after the off-price apparel and home fashions retailer reported fiscal second-quarter profit that rose above expectations, while same-store sales fell more than forecast as “historically high inflation” hurt consumer spending, particularly for home goods.
Shares of Blue Water Vaccines Inc.
BWV,
+145.10%
jumped 187% Wednesday after the biopharmaceutical company said it plans to “explore the potential to develop” a new monkeypox vaccine.
Shares of FuboTV
FUBO,
-9.69%
fell more than 12% on Wednesday, despite the profitability road map laid out by the streaming service at its virtual investor day on Tuesday.
How are other assets faring
Oil futures were firmer, with U.S. WTI crude
CL.1,
+1.58%
adding 1.1% to $87.54 a barrel, despite hopes an Iran nuclear deal may help the country increase exports.
The 10-year Treasury yield
TMUBMUSD10Y,
2.881%
rose 6 basis points to 2.882%.
The ICE Dollar index
DXY,
+0.06%
was falt.
Bitcoin
BTCUSD,
-1.99%
fell 2.4% to $23,392.
Asia markets were broadly firmer after Wall Street moved to a fresh three-month high overnight. Japan’s Nikkei 225
NIK,
+1.23%
added 1.2% and Hong Kong’s Hang Seng
HSI,
+0.46%
climbed 0.5%. In Europe the mood was more mixed, reflecting the dip in U.S. futures on Wednesday, and the Stoxx 600
SXXP,
-0.91%
finished 1% lower.
— Jamie Chisholm contributed to this article.
