- US stocks fell for the first time in four days as investors assessed the path of interest-rate hikes following the release of minutes from the Federal Reserve's most recent meeting, which revealed officials saw risks from tightening more than necessary.
- The S&P 500 index finished near the release of Fed minutes, while the tech-heavy Nasdaq 100 dropped more than 1%. The minutes of the July 26-27 meeting noted the need to eventually slow the pace of rate hikes, but also the desire to assess how their monetary tightening was affecting inflation.
- In the bond market, two-year yields, which are the most sensitive to rate changes, pared most of their rise following the release. Futures contracts reduced the chances of a 75-basis-point Fed hike next month to around 40%, compared to traders who were split between a 75-basis-point hike and a 50-basis-point increase before the minutes. The dollar pared gains.
- US stocks have risen on signs of rising inflation and an earnings season in which four out of five companies met or exceeded estimates. Nonetheless, the prospect of the Fed raising rates further to cool inflation and tip the economy into a recession has weighed on sentiment. During their August 25-27 retreat in Jackson Hole, Wyoming, federal officials may provide new perspectives on the outlook.
- Data released earlier this week showed that retail sales stagnated last month due to declines in auto purchases and gasoline prices, but other categories showed resilient consumer spending. Sales increased by 0.7%, which was higher than expected, excluding gasoline and automobiles.
