U.S. stocks closed mixed after choppy trading on Wednesday as investors pored to minutes from the Federal Reserve’s last meeting earlier this month for clues about its next move.
The latest reading from the U.S. central bank’s January 31-February 1 meeting said officials intended to make “continued increases” but were ready to reach a full stop later this year.
The S&P 500 (^GSPC) fell 0.2%, while the Dow Jones Industrial Average (^DJI) slipped about 80 points, or 0.3%. The tech-heavy Nasdaq Composite (^IXIC) was an outlier, up 0.1%.
“Participants agreed that the Federal Open Market Committee had made significant progress over the past year in moving toward a sufficiently restrictive monetary policy stance,” the minutes read.
“Even so, participants agreed that while there were signs that the cumulative effect of the Committee’s tightening of monetary policy stance had begun to moderate inflationary pressures, inflation remained well above to the Committee’s long-term 2% target and the labor market remained very tight.”
Discussions also showed that most members were in favor of the smaller 0.25% increase granted in the last policy decision, but some members of the group preferred a rate increase of 50 basis points.
Cleveland Fed President Loretta Mester admitted in a speech last week that she would have favored a bigger rise, but officials were unwilling to surprise markets, which were valuing 0.25%.
“The worst of inflation may be in the background, but it remains well above the Fed’s target,” said Mike Loewengart, head of model portfolio construction at the Global Investment Office. of Morgan Stanley in a note. “Ultimately, many headwinds in the market are not going away and investors should expect volatility to continue as they analyze the impact that higher rates will have for longer.”
Earlier today, St. Louis Fed President James Bullard, in a television interview with CNBC, said the US central bank needed to bring the federal funds rate down to a range of 5.25% to 5 .5% to bring inflation back to its target of 2%. .
Wall Street banks recently revised their expectations for upcoming rate hikes by the Federal Reserve. Goldman Sachs and Bank of America teams said last week they estimate three more rate hikes this year. Prior to February’s interest rate hike, some market participants saw the move as potentially marking the end of the Fed’s rate hike cycle.
Coinbase (COIN) was among the movers on Wednesday, falling 1.4% even after the cryptocurrency exchange reported fourth-quarter results that topped Wall Street estimates and full-year losses that were narrower than expected.
Elsewhere in specific names, shares of Palo Alto Networks (PANW) jumped 12.5% after the cybersecurity company raised its full-year earnings outlook and said it was working on cost management.
Chinese search engine Baidu (BIDU) reported better-than-expected fourth-quarter results, boosted by strength in its cloud, advertising and artificial intelligence segments. Shares closed the session down 2.6% after reversing early-day gains.
Meme stock darling AMC Entertainment (AMC) was under scrutiny after the Allegheny County Employee Retirement System filed a class action lawsuit in Delaware alleging the movie company created preferred stock without their permission. The shares rose 2.4%.
In the bond market, Treasury yields were flat early in the day after rising sharply on Tuesday to the highest levels since November.
The moves follow a strong sell-off on Tuesday that saw the S&P 500 plunge 2% below 4000, the Dow wipe out 700 points and the Nasdaq plunge 2.5% – moves ahead as investors adjust their expectations at higher interest rates for longer.
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Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc
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