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Fed minutes say almost all agreed to 0.25% hike last time
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Need to control inflation would likely mean further hikes
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S&P drops for fourth straight session; worst run since
mid-Dec
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Indexes: Dow slips 0.26%, S&P down 0.16%, Nasdaq gains
0.13%
(Adds closing prices)
By David French
Feb 22 (Reuters) - The S&P 500 extended its
losing streak to four sessions as Wall Street ended broadly
lower on Wednesday, with investors cautious despite the latest
guidance on rate policy from the U.S. central bank showing few
surprises.
Minutes from the Federal Reserve's Jan. 31-Feb. 1 meeting
said that "almost all" Fed officials agreed to slow the pace of
increases in interest rates to a quarter of a percentage point.
There was also solid backing though for the belief that the
risks of high inflation remained a "key factor" that would shape
monetary policy and further rate hikes would be necessary until
it was controlled.
Such messaging carried few surprises versus what the Fed and
its governors have been communicating in recent weeks, and
stocks were broadly steady in the wake of the minutes' release,
after choppy trading prior to their publication.
However, a general weakening in the final hour of trading
pushed both the S&P 500 and the Dow Jones Industrial back into the red. The Nasdaq Composite managed
to scrape back into positive territory though in the final
moments, ensuring its own losing streak was snapped at three.
"It's clear that the Fed is determined to keep on with its
rate-hiking campaign, and they are going to do it even as
recession risks grow," said Ed Moya, senior market analyst at
OANDA.
"And that's why, after digesting the minutes, you saw
markets softening a little bit."
For the S&P, it is now on its longest negative run since
mid-December, and finished below 4,000 points for the second
straight day: a level not recorded since Jan. 20.
The Dow fell 84.5 points, or 0.26%, to 33,045.09, the
S&P lost 6.29 points, or 0.16%, to 3,991.05 and the Nasdaq added
14.77 points, or 0.13%, to 11,507.07.
Despite the declines experienced by the S&P and the Dow, the falls were not as sharp as Tuesday's, which was the worst daily performance posted by markets in 2023. Following a market rout in 2022, the three major indexes logged monthly gains in January as investors hoped the Fed would pause its rate hikes and perhaps pivot around year-end.
However, stocks have had a volatile run in February, as traders priced in higher interest rates for longer, assuming that inflation remains higher in a sturdy economy. Money market participants expect rates to peak at 5.35% by July and stay around those levels till the end of 2023. "We'll see what happens with equities, but I think downward momentum should lead over the next couple of weeks," said OANDA's Moya. Most of the 11 major S&P 500 sectors fell, with energy and real estate the poorest performers. The duo declined 0.8% and 1%, respectively. The energy index has finished lower for seven straight sessions, as commodity prices have come under pressure from investor concerns over future economic growth and fuel demand. Meanwhile, CoStar Group Inc fell 5.1% after the online real estate marketplaces provider said it was no longer in talks to buy Realtor.com owner Move Inc from News Corp - which, itself, closed 3.2% lower. Volume on U.S. exchanges was 10.58 billion shares, compared with the 11.61 billion average for the full session over the last 20 trading days.
The S&P 500 posted four new 52-week highs and one new
low; the Nasdaq Composite recorded 36 new highs and 110 new
lows.
(Reporting by Johann M Cherian and Medha Singh in Bengaluru and
David French in New York; Editing by Marguerita Choy)
