Stocks fall, dollar rallies after Fed minutes
Stocks dropped and the dollar rose after the Federal Reserve minutes signaled tempered optimism about growth in the second half of 2020. Treasurys fell as policymakers panned yield-curve control.
The S&P 500 erased gains as the Fed noted the health crisis will weigh heavily on economic activity and repeated its view that the path of the recovery would depend on containment of the virus. U.S. central bankers also appeared to back off from an earlier readiness to clarify their guidance on the future path of interest rates when they met in July. Bonds fell to session lows after the minutes refrained from citing prospects of changes to the size or composition of the purchases of Treasury securities. The greenback advanced after a five-day rout.
Traders pushed down the value of equities after the S&P 500 closed at a record for the first time since the pandemic started amid ultra-easy monetary policy and massive stimulus. The buying stampede fueled debate on whether momentum can be sustained amid lofty valuations and uncertainties over further government relief that could help lift the world's largest economy from a coronavirus-induced recession.
"Policymakers will be on the lookout for signs of inflation, but for now, deflation is a bigger concern at the Fed as the pace of the economic recovery continues to moderate," said Adam Phillips, director of portfolio strategy at EP Wealth Advisors. "The minutes suggested that policy measures like yield curve control and explicit forward guidance aren't guaranteed, and could create some upward pressure on long-term bond yields over the near-term."
Apple Inc. made Wall Street history on Wednesday when its 2020 stock surge pushed the market value over $2 trillion, the first time a U.S. company has surpassed that level.
Target Corp. posted record sales and profit last quarter. Lowe's Cos. reported a strong summer sales pace that beat estimates.
Johnson & Johnson agreed to buy Momenta Pharmaceuticals Inc. for about $6.5 billion to expand in treatments for autoimmune diseases.
These are some of the main moves in markets:
The S&P 500 dipped 0.4% as of 4 p.m. EDT.
The Stoxx Europe 600 Index advanced 0.7%.
The MSCI Asia Pacific Index sank 0.5%.
Currencies
The Bloomberg Dollar Spot Index jumped 0.6%.
The euro sank 0.8% to $1.184.
The Japanese yen weakened 0.6% to 106.08 per dollar.
Bonds
The yield on 10-year Treasurys increased one basis point to 0.68%.
Germany's 10-year yield fell one basis point to -0.47%.
Britain's 10-year yield advanced two basis points to 0.236%.
Commodities
The Bloomberg Commodity Index declined 0.2%.
West Texas Intermediate crude fell 0.1% to $42.83 a barrel.
Gold depreciated 3.1% to $1,939.70 an ounce.
With assistance from Bloomberg's Sophie Caronello, Joanna Ossinger, Adam Haigh, Todd White, Sam Potter, Lynn Thomasson, Ryan Vlastelica and Katherine Greifeld.
