S&P ends lower as Fed minutes fail to stop loss

  • The Fed’s minutes say almost all of them agreed to an increase of 0.25% last time
  • The need to control inflation is likely to mean further hikes
  • Standard & Poor’s is down for the fourth straight session; Worst run since mid-December
  • Indices: The Dow Jones fell by 0.26%, the Standard & Poor’s fell by 0.16%, and the Nasdaq fell by 0.13%.

Feb. 22 (Reuters) – The S&P 500 (.SPX) extended to four straight sessions as Wall Street ended broadly lower on Wednesday, with investors cautious despite recent guidance on interest rate policy from the US central bank not showing up. Only a few surprises.

Minutes from the Fed from January 31 to February. The first meeting said that “almost all Fed officials agreed to slow the pace of interest rate increases to a quarter of a percentage point.

There was also strong support though on the belief that higher inflation risks remained a “major factor” that would shape monetary policy and that further rate hikes would be necessary to bring them under control.

Those messages held few surprises versus what the Fed and its governors have been conveying in recent weeks, and stocks were broadly flat in the wake of the minutes’ release, after trading volatilely before they were published.

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However, general weakness in the last hour of trading has pushed both the S&P 500 (.SPX) and the Dow Jones Industrial Index (.DJI) into the red. The Nasdaq Composite (.IXIC) managed to bounce back into positive territory albeit in the dying moments, ensuring that its losing streak was snapped by three points.

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“The Fed is clearly determined to continue its campaign to raise interest rates, and they will do so even as recession risks grow,” said Ed Moya, senior market analyst at OANDA.

“And that’s why, after absorbing the minutes, I saw the markets pull back a little bit.”

As for the S&P, it is now on its longest negative path since mid-December, ending below 4,000 points for the second day in a row: a level not seen since January 20th.

The Dow fell 84.5 points, or 0.26%, to 33,045.09, the Standard & Poor’s lost 6.29 points, or 0.16%, to 3,991.05, and the Nasdaq rose 14.77 points, or 0.13%, to 11,507.07.

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, US, February 17, 2023. REUTERS/Brendan McDermid

Despite the declines in the S&P and Dow, the declines were not as severe as on Tuesday, which was the worst daily performance the markets have recorded in 2023.

After the market crash in 2022, the three major indices posted monthly gains in January as investors hoped the Fed would halt its interest rate increases and possibly pivot towards the end of the year.

However, stocks were volatile in February, as traders priced in higher interest rates for longer, assuming inflation remained higher given a strong economy.

Money market participants expect rates to peak at 5.35% by July and to remain around those levels until the end of 2023.

“We’ll see what happens to stocks, but I think bearish momentum should be driving over the next couple of weeks,” said OANDA’s Moya.

Most of the 11 major S&P 500 sectors declined, with energy (.SPNY) and real estate (.SPLRCR) the worst performers. The duo fell 0.8% and 1%, respectively.

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The energy index closed lower for seven consecutive sessions, as commodity prices were pressured by investor concerns about future economic growth and fuel demand.

Meanwhile, CoStar Group Inc (CSGP.O) fell 5.1% after the provider of online real estate markets said it was no longer in talks to buy Realtor.com owner Move Inc from News Corp (NWSA.O) – which itself closed down 3.2%. minimum.

Trading volume on US exchanges reached 10.58 billion shares, compared to an average of 11.61 billion for the full session over the last 20 trading days.

The S&P 500 posted four new highs in 52 weeks and one new low; The Nasdaq Composite recorded 36 new highs and 110 new lows.

Additional reporting by Johan M. Cherian and Medha Singh in Bengaluru and David French in New York; Editing by Margarita Choi

Our standards: Thomson Reuters Trust Principles.

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