US stocks closed down on Wednesday, with indexes volatile after investors thought minutes from the Federal Reserve’s meeting in July suggested policymakers may be less aggressive than previously thought when they raise interest rates in September.
Major indexes sharply cut their losses after the release of the minutes, with the Dow briefly turning positive before they returned to earlier losses.
The minutes also showed that Fed officials saw “little evidence” late last month that US inflation pressures were easing, and that participants said it may take longer than anticipated for inflation to dissipate.
The Fed has lifted its benchmark overnight interest rate by 225 points this year to try to curb high inflation.
After the release of the minutes, traders of futures tied to the Fed’s policy rate saw a half-percentage-point rate hike as more likely in September.
“They stayed hawkish, but they also opened the door perhaps for a half of a percentage point hike in September as opposed to 75,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.
The market had been solidly lower ahead of the minutes, with growth shares coming under pressure and weak results from Target weighing on retailers.
According to preliminary data, the S&P 500 lost 31.13 points, or 0.75%, to end at 4,274.07 points, while the Nasdaq Composite lost 164.40 points, or 1.25%, to 12,938.15.
The Dow Jones Industrial Average fell 173.58 points, or 0.51%, to 33,976.73.
“Although inflationary pressures have eased ,there remain pockets of seemingly entrenched inflation, particularly with food prices, rent and labour wages,” Quincy Krosby, chief global strategist for LPL Financial said in a note following the minutes.
After a brutal first-half of the year, stocks are up since the start of July.
Upbeat corporate earnings have helped fuel a rebound.
While Target shares declined, home improvement chain Lowe’s Cos Inc were up after posting a better-than-expected quarterly profit.
Source: SABC News (sabcnews.com)