October 1, 2020

Awaiting Word From Fed, Markets Slip

Stocks were lower on Wednesday as investors weighed the minutes from the Federal Reserve’s July policy-setting meeting.

In afternoon trading, the Standard Poor’s 500-stock index was 0.4 percent lower, the Dow Jones industrial average was 0.5 percent lower and the Nasdaq composite fell by 0.3 percent.

The minutes showed that Federal Reserve policy makers were considering tapering off their huge economic stimulus efforts, according to the official summary, but they did not yet have a clear consensus about the timing of their actions.

The S. P. 500 rose on Tuesday to end a four-day losing streak, but remained under technical pressure as it closed below its 50-day moving average for a third consecutive session. It closed roughly five points below that level, now at 1,657.65 points, which is becoming technical resistance.

Retailers led gains in the Tuesday session and will continue to be in focus in early trading as results from companies including Lowe’s and Target take center stage.

Investors have been grappling over the last several weeks with uncertainty over when the Fed will begin to wind down its $85 billion-a-month stimulus program.

Shares of Toll Brothers, the home-building company, gained 0.5 percent after it reported a jump in revenue as the recovery in the American housing market gathered pace.

Target warned that its annual profit might be near the low end of its forecast as consumer spending remained cautious; its shares fell 3.9 percent.

Shares of the home improvement chain Lowe’s rose 5.1 percent after it reported a bigger-than-expected rise in profit and revenue as the housing market’s recovery encouraged people to spend more on their homes.

Staples reported weaker-than-expected quarterly results on dismal sales in international markets and cut its outlook for the year. Its shares slumped 13.5 percent.

In Japan, the Nikkei ended 0.2 percent higher as investors drew support from a declaration by the Bank of Japan’s governor, Haruhiko Kuroda, that he would not hesitate to expand the bank’s huge asset-buying campaign if the economic outlook darkened.

Among the major currencies — where safe-haven flows ahead of the Fed minutes have favored the yen and Swiss franc — the dollar had recovered some lost ground, gaining 0.4 percent against a basket of currencies to move off a two-month low.

The euro eased 0.4 percent against the dollar, to $1.3367, having touched a six-month high of $1.3452 on Tuesday, and sterling briefly hit a two-month high of $1.5697 against the dollar when a business survey showed an improvement in British factory orders.

In the fixed income markets, benchmark 10-year Treasury yields edged back to 2.83 percent, though rates remained close to 2013 highs as many investor have already positioned for the potential Fed tapering.

Commodity markets were generally softer. Spot gold was down 0.4 percent, at around $1,368 an ounce.

Benchmark New York crude oil for October delivery lost 47 cents, to $104.64 a barrel.

The widely held conviction that the minutes of the Fed’s July meeting will hint at a policy shift next month hit the Indian rupee, Indonesian rupiah and Turkish lira, despite supportive words and actions from those countries’ central banks.

“I don’t think we’re going to get that clear signal as to whether September is when they pull the trigger on tapering, but that is what the markets are hoping for,” said Daragh Maher, foreign exchange strategist at HSBC.

Large current account deficits make all three countries particularly vulnerable to capital outflows at times of monetary tightening.

Emerging stock markets have shared in the sell-off, victims of a growing conviction among investors that an end to Fed bond buying because of the stronger American economic outlook makes developed countries’ debt and equity markets a sounder bet.

Article source: http://www.nytimes.com/2013/08/22/business/daily-stock-market-activity.html?partner=rss&emc=rss