(Bloomberg) — US stocks retraced earlier gains after policy minutes from the Federal Reserve’s latest meeting showed officials reiterating their resolve to tamp down on inflation.
(Bloomberg) — US stocks retraced earlier gains after policy minutes from the Federal Reserve’s latest meeting showed officials reiterating their resolve to tamp down on inflation.
The S&P 500 pared advances and the Nasdaq 100 fell as the meeting minutes showed officials cautioning that an “unwarranted” loosening of financial conditions would complicate their efforts to reach their inflation target.
Policymakers are also concerned that inflation will remain entrenched if the labor market stays resilient. Investors were briefly heartened after several Fed officials said that there was a need to balance two-sided risks. But they subsequently assessed what the meeting minutes highlighted — that the Fed will have to do more if markets do not cooperate.
“The Fed wanted to send a message to the market that they would not be easing or cutting rates anytime in 2023,” said Joe Gilbert, portfolio manager for Integrity Asset Management. “However, we must remember that the Fed also did not forecast raising rates by 400 basis points twelve months ago so their forecasting ability of their own actions is sometimes quizzical.”
Investors are parsing a slew of economic data on Wednesday. Latest numbers from the Institute for Supply Management underscored improving supply chain conditions, declining input prices and slower demand — all developments the Fed would welcome. But job openings data pointed to a robust labor market, which shook sentiment earlier in the session.
All eyes will be on the nonfarm payrolls report on Friday, for any signs of possible softening in the labor market.
Key events this week:
- FOMC meeting minutes, Wednesday
- Eurozone PPI, Thursday
- US ADP employment change, initial jobless claims, Thursday
- China trade, Caixin PMI, Thursday
- Eurozone retail sales, CPI, consumer confidence, Friday
- Germany factory orders, Friday
- US nonfarm payrolls, factory orders, durable goods, Friday
The main markets moves are:
Stocks
- The S&P 500 rose 0.2% as of 2:33 p.m. New York time
- The Nasdaq 100 fell 0.2%
- The Dow Jones Industrial Average fell 0.1%
Currencies
- The Bloomberg Dollar Spot Index fell 0.3%
- The euro rose 0.5% to $1.0599
- The British pound rose 0.7% to $1.2055
- The Japanese yen fell 1.1% to 132.50 per dollar
Cryptocurrencies
- Bitcoin rose 0.8% to $16,801.82
- Ether rose 3.4% to $1,252.4
Bonds
- The yield on 10-year Treasuries declined four basis points to 3.70%
- Germany’s 10-year yield declined 12 basis points to 2.27%
- Britain’s 10-year yield declined 16 basis points to 3.49%
Commodities
- West Texas Intermediate crude fell 4.8% to $73.27 a barrel
- Gold futures rose 0.6% to $1,856.90 an ounce
This story was produced with the assistance of Bloomberg Automation.
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