S&P falls as Fed minutes fail to stop run of losses

  • The Fed minutes said almost everyone agreed to a 0.25% hike last time
  • Controlling inflation would mean further hikes
  • S&P falls for fourth straight session; Worst run since mid-December
  • Indexes: Dow down 0.26%, S&P down 0.16%, Nasdaq up 0.13%

Feb 22 (Reuters) – The S&P 500 ( .SPX ) fell broadly on Wednesday as Wall Street extended its losing streak to four sessions, as investors remained cautious even as the U.S. Federal Reserve’s latest guidance showed few surprises.

Federal Reserve Jan. 31-Feb. 1 meeting said “almost all” Fed officials agreed to cut the pace of interest rate hikes by a quarter of a percentage point.

There was also strong support for the belief that the risks of high inflation were a “key factor” shaping monetary policy and that further rate hikes would be necessary until it was contained.

Such news produced few surprises in recent weeks against the central bank and its governors communicating, and after brisk trading ahead of their release, stocks were broadly flat following the release of the minutes.

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However, general weakness in the final hours of trading sent both the S&P 500 (.SPX) and the Dow Jones Industrial (.DJI) back into the red. The Nasdaq Composite (.IXIC) managed to bounce back into positive territory at the close, confirming its own losing streak of three.

“It’s clear that the Fed is committed to continuing its rate hike campaign,” said Ed Moya, senior market analyst at OANDA.

“That’s why, after digesting the minutes, you see the markets soften a little bit.”

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For the S&P, it was on its longest negative run since mid-December and ended below 4,000 points for the second day in a row: it hasn’t been recorded since January 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.

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City on February 17, 2023. REUTERS/Brendan McDermid

Despite declines in the S&P and Dow, the declines were not as sharp as Tuesday’s, the worst daily performance posted by the markets in 2023.

Following a market slump in 2022, the three major indexes posted monthly gains in January as investors hoped the central bank could pause its rate hikes and head toward year-end.

However, stocks had a volatile run in February as traders priced in a long run on higher interest rates, assuming higher inflation in a firmer economy.

Money market participants expect rates to reach 5.35% by July and remain around those levels until the end of 2023.

“We will see what happens in the stock, but I think downward momentum will lead in the next couple of weeks,” OANDA’s Moya said.

Most of the 11 major S&P 500 sectors fell, with energy (.SPNY) and real estate (.SPLRCR) the worst performers. Both fell 0.8% and 1% respectively.

The energy index ended seven straight sessions lower as commodity prices came under pressure from investor concerns about future economic growth and fuel demand.

Meanwhile, Costar Group Inc ( CSGP.O ) fell 5.1% to close 3.2% after the online real estate marketplace provider said it was not in talks to buy Realtor.com owner Move Inc from News Corp ( NWSA.O ). % decrease.

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Volume on US exchanges was 10.58 billion shares, compared to the full session’s average of 11.61 billion over the last 20 trading days.

The S&P 500 posted four new 52-week highs and one new low; The Nasdaq composite posted 36 new highs and 110 new lows.

Reporting by Johan M Cherian and Medha Singh in Bangalore and David French in New York; Editing by Margaret Choi

Our Standards: Thomson Reuters Trust Principles.

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