Dow closed flat, S&P 500 and Nasdaq slipped 3-session after Fed minutes signaled tapering plans loomed

US stocks closed mostly higher on Wednesday, minutes after the Federal Reserve’s latest policy meeting bolstered expectations that the central bank will start reducing its $120 billion in bond purchases a month before the end of the year.

How did the stock indices perform?
  • Dow Jones Industrial Average
    DJIA

    It fell less than a point to close at the level of 3,4377.81, but extended the losing streak for the fourth consecutive day.

  • S&P 500 . Index
    SPX

    It rose 13.15 points, or 0.3 percent, to close at 4,363.80 points.

  • Nasdaq Composite Index
    COMP

    It rose 105.71 points by 0.7% to close at 14,571.64 points.

employment TuesdayAll three major indices declined, which continued the losing streak into a third session.

What drove the market?

The blue-chip Dow Jones gained, snapping a three-session slip, minutes after the Federal Reserve’s September meeting showed the central bank could Start reducing its purchases of emergency assets as early as November or December, indicating that the US economy has made a significant recovery from the worst shocks of the pandemic.

Several Fed officials said they would prefer an even faster cut to the central bank’s current $120 billion pace of monthly purchases of Treasury and agency mortgage-backed securities, rather than the proposed $15 billion cut.

But benchmark Treasury yields were also low, putting pressure on bank stocks that benefit when yields are higher, while providing a boost to technology stocks. 10-year treasury bonds
BX: TMUBMUSD10Y

It fell to 1.549% as investors were analyzing US corporate earnings for the third quarter, as concerns about supply chain problems and labor shortages threaten to dampen corporate earnings.

“This is the start of a pivotal time for the next two weeks, as we begin to take a look at what companies have been through and what they expect they will experience over the next six months,” Wayne Wicker, chief investment officer for MissionSquare Retirement, said in a phone interview.

“That’s why you see people swaying now. You have conflicting messages about whether the economy has seen peak profits and whether inflation will erode into margins and erode profits.

“Stock picking is going to be a more important component in the fourth quarter, because not everything will go up directly.”

Wall Street was weighing a closely watched reading of inflation that came in higher than expected.

Data showed that the US Consumer Price Index rose 0.4% in September after rising 0.3% in August Ministry of Labor said Wednesday. In the twelve months through September, the CPI rose 5.4% after advancing 5.3% year-over-year in August.

I see: Stronger-than-expected US inflation data made bond traders weigh the risks of Fed policy error

Excluding the volatile food and energy components, the CPI rose 0.2% after rising 0.1% in August, the smallest gain in six months. The so-called core CPI rose 4.0% year over year after rising 4.0% in August.

Rising food, gasoline and rent prices drove most of the progress. Economists polled by the Wall Street Journal had expected a 03% increase in the consumer price index.

Nancy Davis, founder of Quadratic Capital Management, wrote in comments via email on Wednesday: “The still-high CPI on Wednesday points to nearly six months of hot inflation data, indicating that inflation is not as temporary as many predicted by many. former investors.

Companies are increasingly citing the impact of pricing pressures on earnings updates, and investors have been listening eagerly for guidance from C-suite executives on inflation expectations.

NS. NS. Morgan Chase
JPM
The results were better than Wall Street expectations for earnings per share It issued another $2.1 billion in loan loss reserves. However, its shares fell 2.6%.

On the flip side, if other major banks release loan-loss reserves, that’s a bullish sign about the health of the US economy, Wicker said.

“I think the pattern was that the coast was very clear,” he said. “We haven’t really seen the kind of loan losses we had to prepare for a year and a half ago.”

is reading: Will the unbridled rise of bank shares continue? Here are the numbers to watch in this week’s earnings

Analysts expect S&P 500 earnings to rise 27.6% annually, Significantly slower pace from 52.8% in the first quarter and 92.4% in the second quarter, both of which benefited from favorable comparisons with the onset of the COVID-19 pandemic last year. Bank of America warned about it Guidance from companies can be ugly Central “Quarter of Manufacture or Interval”.

Opinion: Beating the market will still be tough even if you know the earnings of the S&P 500 before anyone else

Despite the inflation data released on Wednesday, Davis said Fed officials are unlikely to change their views on tapering, as it will likely end buying by mid-2022 as it prepares to eventually normalize interest rates.

Quadratec’s Davis said: “The Fed is already expected to announce its tiered plans, and it’s likely the central bank will want to maintain selectivity with their staging course.

What companies have been the focus of attention?
How did you trade other assets?
  • ICE . US Dollar Index
    DXYAnd

    The currency gauge fell against a basket of six major competitors by 0.5%.

  • US oil futures lost ground with the index
    CL00

    It closed 0.3% to settle at $80.44 a barrel. gold futures contracts
    GC00

    It closed 2% higher to settle at $1,794.70 an ounce.

  • The Stoxx Europe 600
    XX: SXXP

    It closed up 0.7%, while the FTSE 100 index closed in London
    United Kingdom: UKX

    0.2% profit.

  • Shanghai boat
    CN: SHCOMP

    It rose 0.4%, while Japan’s Nikkei 225 index rose
    JP: NIK

    lost 0.3%.

Barbara Colmayer contributed to the report

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