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S&P 500 Cuts Losses as Fed Minutes Spark Turnaround

Published 02/16/2022, 01:49 PM
Updated 02/16/2022, 02:59 PM
© Reuters.

By Yasin Ebrahim

Investing.com -- The S&P 500 cut some losses Wednesday, as the release of the Fed minutes didn't provide further signs that a 50 basis point rate hike in March was in play, though upside was kept in check by ongoing Russian-Ukraine tensions.

The S&P 500 rose 0.1%, the Dow Jones Industrial Average slipped 0.12%, or 42 points, the Nasdaq Composite fell 0.2%.

Federal Reserve officials were in favor of increasing interest rates and initiating a "significant" reduction in the size of balance sheet that could begin later this year, the Fed’s January meeting minutes showed Wednesday.

The minutes also showed that members would only favor faster rate hikes if the pace of inflation doesn't, cooling expectations somewhat of aggressive Fed action. The minutes, however, were somewhat stale as they preceded recent economic data showing a stronger labor market, and inflation that remains at multi-decade highs.      

The two-year U.S. Treasury yields, which is sensitive to expectations Fed rate hikes, eased slightly. 

The Fed minutes boosted sentiment on stocks offsetting fresh geopolitical tensions. 

U.S. Secretary of State Antony Blinken said there weren’t any signs of a “meaningful pullback" of Russian forces from the border with Ukraine. That cooled expectations for de-escalation in Ukraine-Russia tensions after Russia on Tuesday claimed that it had pulled some of its troops from the Ukraine border.

Cyclicals sectors including materials, industrials and energy led the rebound broader higher, with the latter supported by rising oil prices.

Tech moved off session lows, though social media stocks were under pressure after Alphabet (NASDAQ:GOOGL)’s Google said it would limit ad-tracking on android powered smartphones.

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Meta Platforms (NASDAQ:FB), which earlier this month flagged slowing user growth due to Apple’s privacy changes, fell more than 2%. Snap (NYSE:SNAP) and Twitter (NYSE:TWTR) were also down more than 3%.

NVIDIA (NASDAQ:NVDA) gave up some its gains from Tuesday, even as it announced a partnership with Jaguar Land Rover  to build automated driving systems.

The chipmaker will remain in focus as it is set to report quarterly results after the closing bell.

On the economic front, meanwhile, U.S. retail sales rose by a more than expected 3.8%, the strongest monthly pace since March.

Latest comments

Just in time! Saved the day... DOW 40K! And 7 dollar bread. (
"US stocks trim losses," the most prolific headline in internet news history.  Another miracle "in late trade" for the laughingstock of the financial world.
Did the FED minutes deserve to spark a turnaround. After all, minutes state it'll soon be "time to raise rates VERY SOON," now the why, "the labor market is strong--" Let's cut Powell off there, is it, the unemployment rate went up to 4%. How strong is that balanced vs. jobs created? I'm asking you, as, the Jobs Report came out AFTER the FED meeting. And what about 7% inflation, we'll, now it's 7.5%, the est. off by a large 0.2%. So, then retail sales today, smoking hot. Ya think Powell anticipated that. And, oh, yes, you can't make this stuff up, folks, and there is sooo much more go list, like industrial production capacity a record 77.6% release today, vehicle sales, 15.5M units, PPI, again, is AFTER Powell spoke, that shattered record, YoY plus month Over month not to shabby to the inflation getting to panic mode side. Warranted rally off antiquated, 3 week old FED minutes that only seen much ramp of inflationary data? You decide
That didn’t age well
The economy and government TOO WEAK FOR ANY RISE IN RATES.
couldn't agree more
LOL, economy strong, Powell said so. And, what's more, it has only gotten STRONGER, what, with Jobs and PPI, and, retail sales. This is FRESH data, minutes VERY stale now, 3 weeks old, only thing from minutes you need to know, "it'll be time to raise FED funds rate VERY SOON." That's it, know this too, in the FED toolbag for QE is secrecy, a shock and awe kinda thing. All this data makes my forecast perfectly appropriate at next FOMC: 1% INITIAL HIKE , go get the damn consumer to quit wildly spending, January, winter for Pete's sake and spending like M2 is going out of style. Yikes. 1%! Mark this post.
Why would 1% make a dent when inflation itself is 7.5% and that hasn't reduced retail spending. Gas prices up 40% and doesn't slow economy either. 1% is peanuts and won't do a thing
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