WALL Street’s main indexes dropped on Wednesday after the release of minutes from the Federal Reserve’s policy meeting last month showed officials felt the employment benchmark for decreasing support for the economy “could be reached this year.”
Most S&P 500 sectors ended lower, with energy and consumer staples among the weakest performers.
The minutes of the July 27-28 Fed meeting showed different groups worried about inflation and the need to prepare to combat it, with others saying it would take time, and require patience from the Fed, to put Americans back to work.
Investors are looking for signs about when the central bank will rein in its easy money policies, including tapering its bond-buying program, which have been a crucial support as the S&P 500 has roughly doubled from its March 2020 low.
“The Fed minutes did nothing to dispel the thought that tapering will begin soon,” said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia. “We are closer to the end than the middle of tapering, and people don’t know how to react to it.”
Unofficially, the Dow Jones Industrial Average fell 377 points, or 1.07%, to 34,966.28, the S&P 500 lost 47.64 points, or 1.07%, to 4,400.44 and the Nasdaq Composite dropped 130.27 points, or 0.89%, to 14,525.91.
Focus now shifts to the Fed’s annual research conference in Jackson Hole, Wyoming, next week for any read about the central bank’s next steps. Many analysts expect the Fed to announce its plan to taper asset purchases as early as the Sept 21-22 policy meeting.
“We have gotten a rash of both earnings and economic data over the past several weeks that broadly is pointing to a positive outlook for the fundamental backdrop to the market,” Edward Jones’s investment strategist Craig Fehr remarked. “The one wildcard at this stage is going to be the role Fed stimulus is going to play.”
In company news, shares of Lowe’s Cos Inc jumped after the home improvement chain’s quarterly report. Lowe’s said professional builders and handymen were rushing back to its stores, boosting sales.
Declining issues outnumbered advancing ones on the NYSE by a 2.43-to-1 ratio; on Nasdaq, a 1.46-to-1 ratio favoured decliners.
The S&P 500 posted 28 new 52-week highs and 2 new lows; the Nasdaq Composite recorded 50 new highs and 149 new lows.
About 8.8 billion shares changed hands in US exchanges, below the 9.15 billion daily average over the last 20 sessions. – Aug 19, 2021
