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U.S. stock markets closed lower on Wednesday following the release of the Fed’s July FOMC meeting minutes. Majority of Fed officials have opined for more interest rate hike. Investors were also weighing a series of mixed economic data. All the three major stock indexes posted losses for two consecutive days.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) fell 0.5% or 180.65 points to close at 34,765.74. Notably, 24 components of the 30-stock index ended in negative territory, while 6 in positive zone. The tech-heavy Nasdaq Composite finished at 13,474.63, declining 1.2% or 156.42 points due to weak performance of large-cap technology stocks.
The S&P 500 slid 0.8% to end at 4,404.33. 10 out of 11 broad sectors of the benchmark ended in negative territory. The Communication Services Select Sector SPDR (XLC), the Real Estate Select Sector SPDR (XLRE), the Consumer Discretionary Select Sector SPDR (XLY) and the Technology Select Sector SPDR (XLK) fell 1.2%, 1.2%, 1.2% and 1%, respectively.
The fear-gauge CBOE Volatility Index (VIX) was up 1.9% to 16.78. A total of 11.9 billion shares were traded on Wednesday, lower than the last 20-session average of 10.9 billion. Decliners outnumbered advancers on the NYSE by a 3.36-to-1 ratio. On Nasdaq, a 2.73-to-1 ratio favored declining issues.
Fed’s July FOMC Minutes
Majority of Federal Reserve officials remained concerned that the general price level stayed elevated despite the central bank’s decision to adopt strict monetary control and aggressive interest rate hike policies in the last one and half years.
Consequently, the minutes indicate the possibility of more rate hikes in near future. At present, the Fed fund rate is in the range of 5.25-5.5%, marking the highest level in more than 22 years. However, the CME FedWatch currently shows that there exists more than 88% probability that the Fed will keep the benchmark lending rate unchanged in September FOMC meeting.
According to the minutes, “With inflation still well above the Committee’s longer-run goal and the labor market remaining tight, most participants continued to see significant upside risks to inflation, which could require further tightening of monetary policy.”
Per the minutes, “In discussing the policy outlook, participants continued to judge that it was critical that the stance of monetary policy be sufficiently restrictive to return inflation to the Committee’s 2 percent objective over time.”
Economic Data
The U.S. Census Bureau and the U.S. Department of Housing and Urban Development jointly reported that privately owned housing starts in July came in at a seasonally adjusted 1.452 million units, beating the consensus estimate of 1.445 million units. The metric for June was revised downward to 1.398 million units from 1.434 million units reported earlier.
Privately owned building permits in July came in at a seasonally adjusted 1.442 million units, lagging the consensus estimate of 1.47 million units. The metric for June was revised marginally upward to 1.441 million units from 1.440 million units reported earlier.
The Federal Reserve reported that industrial production rose 1% in July, beating the consensus estimate of 0.8%. Industrial production increases after two months of decline. The metric for June was revised downward to a drop of 0.85 from a decline of 0.5% reported earlier.
Capacity Utilization in July came in at 79.3%, marginally higher than the consensus estimate of 79.1%. The metric for June was revised downward to 78.6% from 78.95 reported earlier.
The U.S. Energy Information Administration reported that commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 6 million barrels for the week ended Aug 11, from the previous week.
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Stock Market News for Aug 17, 2023
U.S. stock markets closed lower on Wednesday following the release of the Fed’s July FOMC meeting minutes. Majority of Fed officials have opined for more interest rate hike. Investors were also weighing a series of mixed economic data. All the three major stock indexes posted losses for two consecutive days.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) fell 0.5% or 180.65 points to close at 34,765.74. Notably, 24 components of the 30-stock index ended in negative territory, while 6 in positive zone. The tech-heavy Nasdaq Composite finished at 13,474.63, declining 1.2% or 156.42 points due to weak performance of large-cap technology stocks.
The major loser of the tech-laden index was Advanced Micro Devices Inc. (AMD - Free Report) . The stock price declined 3.7%. The semiconductor giant currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The S&P 500 slid 0.8% to end at 4,404.33. 10 out of 11 broad sectors of the benchmark ended in negative territory. The Communication Services Select Sector SPDR (XLC), the Real Estate Select Sector SPDR (XLRE), the Consumer Discretionary Select Sector SPDR (XLY) and the Technology Select Sector SPDR (XLK) fell 1.2%, 1.2%, 1.2% and 1%, respectively.
The fear-gauge CBOE Volatility Index (VIX) was up 1.9% to 16.78. A total of 11.9 billion shares were traded on Wednesday, lower than the last 20-session average of 10.9 billion. Decliners outnumbered advancers on the NYSE by a 3.36-to-1 ratio. On Nasdaq, a 2.73-to-1 ratio favored declining issues.
Fed’s July FOMC Minutes
Majority of Federal Reserve officials remained concerned that the general price level stayed elevated despite the central bank’s decision to adopt strict monetary control and aggressive interest rate hike policies in the last one and half years.
Consequently, the minutes indicate the possibility of more rate hikes in near future. At present, the Fed fund rate is in the range of 5.25-5.5%, marking the highest level in more than 22 years. However, the CME FedWatch currently shows that there exists more than 88% probability that the Fed will keep the benchmark lending rate unchanged in September FOMC meeting.
According to the minutes, “With inflation still well above the Committee’s longer-run goal and the labor market remaining tight, most participants continued to see significant upside risks to inflation, which could require further tightening of monetary policy.”
Per the minutes, “In discussing the policy outlook, participants continued to judge that it was critical that the stance of monetary policy be sufficiently restrictive to return inflation to the Committee’s 2 percent objective over time.”
Economic Data
The U.S. Census Bureau and the U.S. Department of Housing and Urban Development jointly reported that privately owned housing starts in July came in at a seasonally adjusted 1.452 million units, beating the consensus estimate of 1.445 million units. The metric for June was revised downward to 1.398 million units from 1.434 million units reported earlier.
Privately owned building permits in July came in at a seasonally adjusted 1.442 million units, lagging the consensus estimate of 1.47 million units. The metric for June was revised marginally upward to 1.441 million units from 1.440 million units reported earlier.
The Federal Reserve reported that industrial production rose 1% in July, beating the consensus estimate of 0.8%. Industrial production increases after two months of decline. The metric for June was revised downward to a drop of 0.85 from a decline of 0.5% reported earlier.
Capacity Utilization in July came in at 79.3%, marginally higher than the consensus estimate of 79.1%. The metric for June was revised downward to 78.6% from 78.95 reported earlier.
The U.S. Energy Information Administration reported that commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 6 million barrels for the week ended Aug 11, from the previous week.