Wall Street ends down, but indexes briefly cut losses after Fed minutes

Wall Street ends down, but indexes briefly cut losses after Fed minutes

The Wall Street sign is seen near the New York Stock Exchange in New York City, May 4, 2021. — Reuters pic

Thursday, 18 Aug 2022 4:34 AM MYT

NEW YORK, Aug 18 — US stocks closed lower on Wednesday, with indexes volatile after 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 lower levels.

Weak results from Target TGT.N weighed on the market for much of the session, along with megacap growth shares including Amazon.com MZN.O. Amazon.com ended down 1.9 per cent.

The Fed minutes also showed policymakers committed to raising rates as high as necessary to bring inflation under control.

The Fed has lifted its benchmark overnight interest rate by 225 points this year to a target range of 2.25 per cent to 2.50 per cent. 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 Dow Jones Industrial Average .DJI fell 171.69 points, or 0.5 per cent, to 33,980.32, the S&P 500 .SPX lost 31.16 points, or 0.72 per cent, to 4,274.04 and the Nasdaq Composite .IXIC dropped 164.43 points, or 1.25 per cent, to 12,938.12.

Target shares ended down 2.7 per cent after the retailer reported a 90 per cent fall in quarterly earnings and missed comparable sales estimates. The S&P 500 retail index .SPXRT fell 1.2 per cent.

The news followed upbeat results and outlooks from Walmart WMT.N and Home Depot HD.N the day before.

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 investors have also been optimistic lately that the Fed can achieve a soft landing for the economy.

Home improvement chain Lowe’s Cos Inc LOW.N were up 0.6 per cent after the company posted a better-than-expected quarterly profit.

Early in the day, data showed US retail sales were unexpectedly unchanged in July as falling gasoline prices weighed on receipts at service stations, but consumer spending appeared to pick up at the start of the third quarter.

Volume on US exchanges was 10.76 billion shares, compared with the 10.92 billion average for the full session over the last 20 trading days.

Declining issues outnumbered advancing ones on the NYSE by a 4.04-to-1 ratio; on Nasdaq, a 3.04-to-1 ratio favored decliners.

The S&P 500 posted 4 new 52-week highs and 29 new lows; the Nasdaq Composite recorded 36 new highs and 57 new lows. — Reuters