Stocks tumble after minutes from the Federal Reserve's most recent policy-setting meeting
U.S. stocks on Wednesday, 21 Feb 2018 ended a tumultuous session firmly lower after minutes from the Federal Reserve's most recent policy-setting meeting sparked a fresh wave of volatility, as bond rates clambered higher and the dollar strengthened, weighing on equities.
The Dow Jones Industrial Average lost 166.97 points, or 0.7%, to 24,797.78, after seeing an afternoon rally of 303 points, or 1.2%, at its session peak. The S&P 500 index fell 14.93 points to 2,701.33, a drop of 0.6%, but was up by as much as 31.69 points or 1.2%. The Nasdaq Composite Index meanwhile, shed 16.08 points, or 0.2%, to 7,218.23.
All 11 S&P 500 sectors finished in negative territory, with the energy, consumer staples, utilities, telecom services and real estate sectors leading the retreat. Conversely, the financials, consumer discretionary and industrials groups exhibited relative strength.
All three benchmarks experienced brisk reversals in the afternoon, about an hour before the regular trading session ended and an hour after the FOMC minutes were released.
The U.S. dollar edged higher versus rivals, with the ICE U.S. dollar index which measures the currency against a basket of six major rivals, up 0.1%. A stronger greenback can weigh on commodities priced in dollars as it makes them more expensive to users of other currencies.
Economic data at Wall Street showed that an index that tracks the U.S. manufacturing sector rose to a nearly 3 1/2-year high to 55.9 in February from 55.5, while the services barometer climbed to 55.9 from 53.3, according to IHS Markit's flash PMI. Any number over 50 signifies expansion, and results above 55 are considered exceptional.
Meanwhile, the National Association of Realtors said that the existing-home sales reached a seasonally adjusted annual pace of 5.38 million in January as supply couldn't keep up with demand. Market had expected 5.59 million homes to be sold.
The Fed's transcript showed that several officials expected inflation to accelerate this year but only a couple of officials were worried about the economy growing too hot and too fast. The minutes also did not suggest that officials were pushing for more than three interest rate hikes this year which the central bank had telegraphed previously.
Bullion prices ended higher at Comex on Wednesday, 21 Feb 2018. Gold gained in electronic trade on Wednesday following the release of the minutes from the Federal Reserve's meeting in January, which suggested that central bankers were expecting inflation to tick higher but still remained sanguine over the possibility of the economy overheating.
April gold added $3.80, or 0.3%, to $1,335 an ounce after settling at $1,332.10 earlier. March silver climbed 24 cents, or 1.5%, to $16.68 an ounce versus settlement of $16.61 an ounce.
West Texas Intermediate futures for April delivery fell 11 cents, or 0.2%, to $61.68 a barrel. Brent crude the global benchmark, gained 17 cents, or 0.3%, to finish at $65.42 a barrel. The finish saw the spread between Brent and WTI prices widen after narrowing sharply a day earlier.
U.S. Treasuries extended earlier losses following the release of the minutes, pushing yields higher across the curve. The yield on the 10-yr note finished at 2.94%, up from 2.91% ahead of the minutes and up from 2.89% at Tuesday's close. However, the 2-yr yield had a relatively muted reaction to the minutes, finishing four basis points higher at 2.26%.
On Thursday, investors will receive the weekly Initial Claims report (consensus 233K) and the Leading Indicators report for January (consensus +0.8%) at 8:30 AM ET and 10:00 AM ET, respectively.
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