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S&P 500 dips ahead of Fed minutes

S&P 500 dips ahead of Fed minutes

18 Aug 2021

The S&P 500 slipped slightly on Wednesday as investors awaited the release of the Federal Reserve’s latest meeting minutes for insights into when the central bank may start removing stimulus.

The Dow Jones Industrial Average shed roughly 80 points, after it snapped a 5-day winning streak on Tuesday. The S&P 500 dipped 0.2% and the Nasdaq Composite traded near the flatline.

“This is the summer grind,” said Jeff Kilburg, Sanctuary Wealth chief investment officer.

The Fed publishes its meeting minutes from its July gathering at 2 p.m. ET. Market participants will be looking for clues about when the central bank could start dialing back its monthly bond buying program.

“The Fed minutes are always critical and scrutinized, and more importantly, they help illuminate the real sentiment inside of the Fed,” Kilburg said.

Since that July meeting, there’s been growing support within the Fed to announce a tapering in September and begin it in October. The 10-year Treasury yield inched slightly higher to around 1.27% on Wednesday ahead of the release.

Elsewhere, housing starts fell 7% in July to a seasonally adjusted annual rate of 1.534 million units, well below economists’ expectations.

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Investors also waded through more earnings reports from major retailers Tuesday.

Shares of Lowe’s popped after the home improvement company’s earnings last quarter topped expectations, with higher sales to home professionals.

Target shares pulled back despite the retailer beating on second-quarter earnings. The company’s profit and revenue topped expectations and the company raised its forecast for the second half of the year, citing a good start to back-to-school spending.

Meanwhile, Pfizer shared gained and Moderna’s stock traded off its lows after the U.S. announced it will begin distributing Covid-19 booster shots next month. New data show vaccine protection wanes over time, top U.S. health officials said.

The booster shot announcement comes as the highly contagious delta variant spreads, weighing on investor sentiment about the pace of economic reopening.

“The stock market is way overdue for a correction. Covid cases continue to spike higher darkening economic reopenings, consumer data shockingly has collapsed recently. …Several stocks have stopped reacting positively to good earnings, inflation reports remain hot, and Federal Reserve taper talk is everywhere,” Jim Paulsen, chief investment strategist at the Leuthold Group, said.