4:07pm: Market braces for more rate hikes
The Dow closed Wednesday down 129 points, 0.4%, at 34,289, the Nasdaq Composite fell 25 points, 0.2%, to 13,792 and the S&P 500 slid 9 points, 0.2%, to 4,447. The small-cap Russell 2000 index declined 20 points, 1%, to 1,877.
Already in the red, the major indexes temporarily slid even lower this afternoon following the release of the minutes from the Federal Reserve's June meeting, which indicated more interest rate hikes are likely this year. However, the decline was a relative blip.
“There’s no question that Fed rate hike policy continues to drive investors’ thoughts related to the second half of the year’s market trajectory and economic trajectory,” said Greg Bassuk, CEO of AXS Investments.
“That continued aggressive rhetoric or messaging around their plans for the coming months ... got investors a lot more skittish,” he said, adding that they already begun “talking about and contemplating the timing of when rates are going to start to drop later this year into 2024.”
3:05pm: FOMC members favor more rate increases
More interest rate increases are on the way if the minutes from the Federal Reserve’s June meeting are any indication.
Nearly all Federal Open Market Committee members believe additional policy tightening will be necessary in the future, even after the body stood pat on rates in June, according to the minutes released Wednesday afternoon.
The unanimous June pause came after 10 consecutive rate increases totaling 5 percentage points. According to the minutes, “leaving the target range unchanged at this meeting would allow them more time to assess the economy’s progress toward the Committee’s goals of maximum employment and price stability.“
12:05pm: Investors eye Federal Reserve minutes for rate clues
US stocks were lower in noon trading ahead of this afternoon’s release of minutes from the June 13-14 Federal Reserve meeting that could provide more details on where monetary policy is heading.
At midday, the Dow lost 87 points to 34,332, while the S&P 500 eased 8 points at 4,448 and the tech-heavy Nasdaq slipped 36 points to 13,780.
“It’s clear that it’s a tug of war at the Fed. The question is, how deep is it?,” LPL Financial chief global strategist Quincy Krosby said.
“Anything that the market can glean in terms of how deep is the divide within the Fed will be important,” he added.
Notable movers included shares of Rivian Automotive Inc, which rose nearly 3% after the electric vehicle maker reported 12,640 deliveries during the second quarter, up 59% sequentially and surpassing analyst expectations of 11,000 vehicles.
9:35am: China data dampens market mood
US stocks moved lower at the open on Wednesday as traders returned from the Independence Day holiday.
Weighing on sentiment was data out of China showing the nation’s service sector growth has slowed ahead of the highly anticipated Fed minutes due for release this afternoon. Also weighing on sentiment was the news that China is placing curbs on exports of metals used in the semiconductor industry.
“The mood has been dampened by news that China will restrict the export of metals used in the semiconductor industry in the latest tit-for-tat move in an escalating US- Sino tech trade war,” noted FOREX.com market analyst Fiona Cincotta.
Just after the market opened, the Dow Jones had slipped 130 points or 0.4% at 34,288 points, the S&P 500 was down 15 points or 0.3% at 4,440 points, and the Nasdaq was down 43 points or 0.3% at 13,773 points.
7:45am: Cautious open expected
US stocks are expected to return cautiously from the Independence Day break, with investors awaiting the publication of minutes from June’s Federal Reserve meeting and focused ahead to Friday's, always key, non-farm payrolls report.
In pre-market trading on Wednesday, futures for the Dow Jones Industrial Average (DJIA) were down 0.5%, while those for the S&P 500 and for the Nasdaq 100 also both shed 0.5%.
Markets were shut Tuesday for the Fourth of July holiday, and only traded for a half-day on Monday when the DJIA added just 10 points, or 0.03%, to end at 34,418, while the S&P 500 rose 0.1%, and the Nasdaq Composite gained 0.2% in the first session of the second half of 2023.
Monday's gains built on a strong start to 2023, which saw the Nasdaq Composite close out its best first half of the year since 1983, while the S&P 500 notched up its best first-half advance since 2019.
Much today will depend on the June Federal Reserve Open Market Committee (FOMC) meeting minutes, scheduled for release at 2.00pm ET, which could shed some light on the path for interest rate hikes going forward.
TickMill Group’s market analyst Patrick Munnelly commented: "The minutes of the Fed's June meeting, where interest rates were left unchanged, may provide some clues. Fed Chair Powell has indicated that the pause should be seen as a temporary break, and a majority of policymakers believe two more rate hikes may be necessary this year.
"Market expectations currently suggest an 85% probability of a rate hike on July 26th, but there is more scepticism about additional hikes afterward. While not much new information is expected from the minutes, the discussion details may shed light on the reasons behind the pause. Market participants will also be keen to identify the factors policymakers will consider when deciding on a potential July rate hike."
Elsewhere, New York Fed President John Williams is expected to speak at 4.00pm ET at the 2023 Annual Meeting of the Central Bank Research Association (CEBRA) in New York City.
On the data front on Wednesday, May factory orders will be released around 10.00am, with economists forecasting a rise of 0.6%, which would be greater than the 0.4% increase the previous month.