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S&P 500, Dow close lower
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Benchmark 10-year yields fall
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U.S. dollar gains, gold drops
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Oil prices shed 3%
(Updates prices with U.S. market close)
By Chibuike Oguh
NEW YORK, Feb 22 (Reuters) - Global equities and U.S.
Treasury yields were lower on Wednesday after minutes of the
Federal Reserve's last meeting showed that officials favored a
moderation in the pace of interest rate hikes as inflation
begins to recede.
A solid majority of Fed policy makers agreed that it was
appropriate for the central bank to raise rates by 25 basis
points, even as they reiterated that the inflation outlook would
keep driving further rate actions, the minutes showed. Only a
few officials supported a rate hike of 50 basis points.
The minutes from the Jan. 31 to Feb. 1 meeting preceded
recent strong economic data that demonstrated the resilience of
the U.S. economy and heightened worries of a longer
rate-tightening cycle.
"The minutes are a little bit outdated because of the data
that came out after the Fed discussion and it's not as important
as people think," said Moustapha Mounah, portfolio manager at
James Investments in Dayton, Ohio.
The MSCI world equity index , which tracks
shares in 50 countries, was down 0.51%. European stocks shed 0.33%.
Wall Street stocks finished a choppy session lower following
the Fed's minutes. The Dow Jones Industrial Average fell
0.26% to 33,045.09, the S&P 500 lost 0.16% to 3,991.05
and the Nasdaq Composite added 0.13% to 11,507.07.
U.S. Treasury yields retreated after surging to three-month
highs. Benchmark 10-year yields made gains but were
still lower at 3.9175% after the release of the minutes.
"The bond market has already priced in more rate hikes but
the stock market hasn't repriced to reflect all of the movement
in the rates," Mounah added.
St. Louis Fed President James Bullard, a non-voting member
of the Fed's rate-setting committee this year, on Wednesday
reiterated his view that a Fed policy rate in the range of 5.25%
to 5.5% would be adequate to bring inflation toward the central
bank's 2% goal.
The U.S. Treasury yield curve that measures the gap between
yields on two- and 10-year Treasury notes , seen as
an indicator of economic expectations, remained deeply inverted
at minus 77.40 basis points.
"If the most hawkish guy, who is a non-voting member, is at
a 75 basis point hike, then maybe the consensus is 50 basis
points and that is a little lower than the market," said Thomas
Hayes, chairman at Great Hill Capital in New York.
The U.S. dollar gained due to the unexpected strength of the
American economy revealed in recent economic data,
notwithstanding interest rate hikes by the Fed. The dollar index rose 0.374%, while the euro down 0.42% to $1.0601.
Oil prices fell 2% on growing concerns over oil demand as
the Fed aims to keep hiking rates to reduce surging consumer
prices. Brent crude futures settled 3% lower at $80.60
per barrel. The West Texas Intermediate crude futures (WTI) 3% to end at $74.05 a barrel.
Gold prices fell as the U.S. dollar gained. Spot gold dropped 0.5% to $1,825.60 an ounce, while U.S. gold futures fell 0.43% to $1,825.10 an ounce.
(Reporting by Chibuike Oguh in New York; Editing by Chris
Reese, Will Dunham and Sharon Singleton)
