Fed’s FOMC Meeting Minutes to Unveil Inflation Rate and Market Outlook
By Today, the Federal Open Market Committee (FOMC) will release minutes from the Jan. 31-Feb.[0] 1 meeting of the central bank, which could provide insight into the Fed's future rate hikes and its recent 25-basis-point increase.[1] The minutes will be studied carefully for more information on how high policymakers think interest rates will have to go to tame inflation, which has been very persistent.[2]
The Dow Jones Industrial Average fell 2.1%, or 697 points, and the S&P 500 was down 2%, while the Nasdaq Composite slumped 2.5% on Tuesday in anticipation of the minutes.[3] The 10-year U.S. Treasury yield jumped to 3.95%, closing at its highest level since Nov. 9, as investors worried about the future of rates sparking a stock market selloff.[1]
Home Depot (HD) saw its stock plummet over 7% yesterday, topping the Dow Jones Industrials' list of biggest losers after announcing that its fourth-quarter comparable same-store sales unexpectedly dropped by 0.30%, compared to the predicted 0.29% increase.[4] DOCU's stock fell by over 7% after UBS gave it a “sell” rating.[4] Meanwhile, Palo Alto Networks' (PANW) stock jumped nearly 12% after the cybersecurity firm raised its annual profit outlook and said it was working on managing costs.[5]
Carol Schleif, chief investment officer at BMO Family Office, noted that markets are still trying to adjust to the reality that the Fed is unlikely to pivot and is instead still focused on fighting inflation, which suggests that investors should be prepared for interest rates to stay higher for longer and could see continued volatility through year-end.[6] Jeffrey Roach, chief economist for LPL Financial, added that a tight labour market and resilient consumer demand could goad the Federal Reserve to maintain its rate hiking campaign into the summertime.[6]
In other news, the yield on the benchmark 10-year Treasury note surged 12 basis points to 3.95% and the S&P 500 futures rose 0.2% as of 7:31 a.m.[0] New York time.[7] Gold futures were up 0.3% to $1,848.15/oz, while EUR/USD decreased by 0.1% to 1.0634.[2] All 11 S&P sectors finished in the red, led by a 3.3% fall in Consumer Discretionary.[8]
0. “Stock Market News Today: Tech Leads Stocks Ahead of FOMC Meeting” TipRanks, 22 Feb. 2023, https://www.tipranks.com/news/stock-market-news-today-futures-inch-up-ahead-of-fomc-minutes
1. “Fed Minutes Are Released Today. What to Expect This Time.” Barron's, 22 Feb. 2023, https://www.barrons.com/articles/fed-minutes-stocks-federal-reserve-interest-rates-markets-b19c6099
2. “Dow futures largely flat; Fed minutes to determine market direction By Investing.com” Investing.com, 22 Feb. 2023, https://www.investing.com/news/stock-market-news/dow-futures-largely-flat-fed-minutes-to-determine-market-direction-3010308
3. “Dow Jones Rises Ahead Of Fed Minutes; Baidu Surges On Earnings; Nvidia Earnings Next” Investor's Business Daily, 22 Feb. 2023, https://www.investors.com/market-trend/stock-market-today/dow-jones-futures-rise-ahead-of-fed-minutes-nvidia-earnings-on-deck/
4. “Stocks Sink As 10-Year T-Note Yield Rises To 3-1/4 Month High” Barchart, 21 Feb. 2023, https://www.barchart.com/story/news/14410202/stocks-sink-as-10-year-t-note-yield-rises-to-3-1-4-month-high
5. “Stock market news today: Stocks edge higher after sharp sell-off” Yahoo News, 22 Feb. 2023, https://news.yahoo.com/stock-market-news-today-february-22-2023-120842564.html
6. “Stocks are tanking today because of fears the Fed is nowhere near winding up its inflation fight” Financial Post, 21 Feb. 2023, https://financialpost.com/investing/stocks-fall-fed-fears
7. “US Stock Futures Inch Higher Ahead of Fed Minutes: Markets Wrap” Yahoo! Voices, 22 Feb. 2023, https://www.yahoo.com/now/asia-stocks-us-shares-lower-223133948.html
8. “Yield Jump, Consumer Worries Push Stocks to One-Month… – Ticker Tape” The Ticker Tape, 21 Feb. 2023, https://tickertape.tdameritrade.com/market-news/yield-jump-consumer-worries-push-stocks-to-one-month-lows-sending-spx-under-4-000-19398
