4:13pm: Investors react to Fed minutes
The Dow closed Wednesday down 285 points, 0.8%, at 37,430, the Nasdaq Composite lost 174 points, 1.2%, to 14,592 and the S&P 500 declined 38 points, 0.8%, to 4,705. The small-cap Russell 2000 index shed 66 points, 3.2%, to 1,691.
Coming off its worst session since October the Nasdaq struggled again to start 2024.
Investors also responded to the the release of the minutes of December's Federal Reserve meeting, which suggested that rate cuts might not be coming as soon as the market hoped.
“Participants generally stressed the importance of maintaining a careful and data-dependent approach to making monetary policy decisions and reaffirmed that it would be appropriate for policy to remain at a restrictive stance for some time until inflation was clearly moving down sustainably toward the Committee’s objective,” the minutes stated.
12:00pm: Stocks extend losses ahead of release of Fed minutes
Stoocks continued to disappoint as investors mulled new economic data and looked ahead to the release of the minutes of December's Federal Reserve meeting.
At midday, the Dow Jones Industrial Average was down 230.86 points, 0.6%, at 37,484.18, the S&P 500 was down 32.03 points, 0.7%, at 4,710.80 and the Nasdaq Composite was down 141.41 points, 1.0%, at 14,624.53.
Craig Erlam at Oanda said: "Stock markets are spending a second day in the red, continuing the softer start to the year as traders await minutes from the December FOMC meeting."
"Given the remarkable end to 2023, it's not particularly surprising that we're seeing a little profit-taking at this stage. A lot has been priced in and we're awaiting some big figures on the US labor market later in the week."
"The FOMC minutes later today could provide a bit of a spark, although I'm not entirely sure what of significance we can learn from them at this stage."
New data showed the US manufacturing sector continued to contract, but at a slightly slower rate in December, while the number of job openings fell slightly.
The Institute for Supply Management's manufacturing purchasing managers index rose to 47.4 in December, from 46.7 in November.
"The overall economy continued in contraction for a third month after one month of weak expansion preceded by nine months of contraction and a 30-month period of expansion before that," said Timothy Fiore, chair of the ISM.
Also on Wednesday, the US Bureau of Labor Statistics reported the number of job openings decreased to 8.79 million on the last business day in November from 8.85 million a month earlier.
9:40am: Stocks retreat as investors pare back early rate cut hopes
Stocks opened lower, ahead of the release of the minutes of December's Federal Reserve meeting, as the cautious start to 2024 continued.
Shortly after the opening bell, the the Dow Jones Industrial Average was down 148.45 points, 0.4%, at 37,566.59, the S&P 500 was down 23.58 points, 0.5%, at 4,719.25 and the Nasdaq Composite was down 100.19 points, 0.7%, at 14,665.74.
Deutsche Bank's Jim Reid noted the falls come amid "growing scepticism about the chance of near-term rate cuts."
He noted at the end of 2023, futures were fully pricing in a Fed rate cut by March, but after yesterday’s session that had been dialled back to a 87% probability and overnight it has further moved lower to 85%.
Reid added today's minutes should offer some more clues on the rate cut speculation.
Stocks on the move include Bristol-Myers, down 2.5%, after Bank of America downgraded to 'hold' from 'buy.'
7:00am: Stocks seen lower ahead of release of Fed minutes
Stocks are expected to open lower continuing the subdued start to 2024.
In pre-market trading, futures for the Dow Jones Industrial Average were down 0.2%, while those for the S&P 500 were 0.3% lower and contracts for the Nasdaq 100 futures declined 0.4%.
The US Federal Reserve will release the minutes of its December meeting of the Federal Open Market Committee, late in today’s session.
At the meeting, policy makers decided to keep interest rates at their 22-year high but signalled cuts in 2024, triggering an exuberant stock market rally.
The Fed has since tried to temper expectations of how imminent those cuts are.
Joshua Mahony at Scope Markets said the minutes provide an “opportunity for the disparity between market rate expectations and the Fed outlook to narrow, with traders keeping a close eye on the language behind a meeting that was widely considered to be highly dovish.”
“With many Fed members emerging to reign in expectations following that meeting, there is a good chance that we see a somewhat less expansive view than that expressed by Jay Powell,” Mahony thinks.
“After-all, the dot plot expectations signal a likely three rate cuts this year, bringing risk for equities given the current market pricing for six,” he added.
Separately, economists expect US job openings, a proxy for labour demand, to have fallen to 8.85 million in November from 8.73 million in October, kicking off a series of updates on the labour market.
Elsewhere, the Institute for Supply Management’s manufacturing purchasing manager’s index is forecast to have nudged up to a reading of 47.1 in December from 46.7 in November, leaving the sector within contraction territory.