- The U.S. central bank is scheduled to release the minutes from its July 26 meeting at 2 p.m. in New York.
- The minutes are a summary of what the top Fed officials discussed during their meetings.
- Wall Street will be looking for clues about the Fed’s next monetary policy move.
Tuesday, August 16, 2017
U.S. equities traded higher on Wednesday as investors looked ahead to a key release from the Federal Reserve.
The Dow Jones industrial average rose about 70 points, with Home Depot contributing the most gains. The S&P 500 gained 0.3 percent, with materials leading advancers. The Nasdaq composite also advanced 0.3 percent.
The U.S. central bank is scheduled to release the minutes from its July 26 meeting at 2 p.m. in New York. The minutes are a summary of what the top Fed officials discussed during their meetings.
Wall Street will be looking for clues about the Fed’s next monetary policy move. Investors largely expect the central bank to start unwinding its massive $4.5 trillion bonds portfolio — which it accrued trying to stem the economic downturn from the financial crisis — in September.
But the market is split as to whether the Fed will raise rates once more this year. Market expectations for a December rate hike were about 45 percent, according to the CME Group’s FedWatch tool.
The minutes “will be a focus today but Bill Dudley told you all you needed to know as we approach the September meeting. QT [Quantitative tightening] is starting,” said Peter Boockvar, chief market analyst at The Lindsey Group, in a note.
Dudley, the New York Fed president, said last week the central bank expects inflation to rise over the next several months. Inflation data has been sluggish recently, dampening the market’s outlook for tighter monetary policy.
“As for the December meeting, I’ll say again, tell me where the S&P 500 will be then (and thus how it reacts to QT) and I’ll tell you what the Fed will do,” Boockvar said.
U.S. Treasury yields traded mixed ahead of the minutes’ release, with the benchmark 10-year yield trading at 2.264 percent and the two-year yield at 1.351 percent.
Investors also digested weaker-than-expected housing data, as housing starts and permits fell unexpectedly last month.
Equities have risen sharply this year, with the S&P 500 advancing about 10 percent year to date and hitting record highs. But stocks suffered their second-worst week of the year last week as geopolitical tensions rose.
“Technicals are really coming into play here as the S&P and the Nasdaq trade just above their 50-day moving averages,” said Adam Sarhan, chief executive officer of 50 Park Investments. “If they can fight and hold above those levels, then that’d be good for stocks.”
Stocks ended flat in the previous session, as a drop in retail stocks capped gains. The SPDR S&P Retail exchange-traded fund (XRT) fell 2.7 percent as shares from major retailers dropped following the release of their quarterly results.
But the index rose 1.4 percent in early trade, as shares of Target climbed on strong quarterly results.