Fed minutes weigh on Wall Street, bond rates rise

The New York Stock Exchange reacted lower on Wednesday to the minutes of the last meeting of the American Federal Reserve (Fed) which is very firm and on the alert in the face of inflation.

The Dow Jones index fell 0.52% to 34,765.74 points, the technology-dominated Nasdaq lost 1.15% to 13,474.63 points, the S&P 500 dropped 0.76% to 4,404.33 points while bond rates climbed.

The bond market tightened significantly after the publication of the “minutes” of the meeting of the monetary policy committee on July 26. Yields on ten-year bills soared to 4.26%, their highest level since 2008.

In this report of the meeting where a new rate hike was decided, “most participants recognized that there were still risks” of persistence of inflation which could “require further tightening of monetary policy” .

The “minutes weighed on Wall Street”, summed up Peter Cardillo of Spartan Capital.

In addition, noted also Chris Low, chief economist of FNH Financial, Fed economists continue to believe that US economic growth will slow and unemployment will increase a little in 2024.

“The minutes were stricter than we thought,” Art Hogan of B. Riley Wealth Management added to AFP.

“It looks like there’s a small cohort that thinks we’ll need to raise rates further this year. That’s enough to invite investors to take profits” on stock markets, he added. .

The dollar gained strength against the euro and the yen after the release of the minutes.

Among the other indicators of the day, industrial production in the United States rose again in July, after two consecutive months of decline, exceeding market expectations.

Carried mainly by public utility services such as the supply of electricity for air conditioning in this period of extreme heat, it increased by 1% over one month, after a drop of 0.8% in June. Over one year, it remains down 0.3%.

On the housing market front, housing starts rose 3.9% in July, close to expectations, but building permit applications, which give an indication of market developments, are almost stable ( +0.1%).

As for values, the title of Target department stores rose 2.92% after posting net earnings per share above forecasts on a quarterly turnover nevertheless in decline.

The group, which has suffered from controversy over its articles celebrating the LGBT+ community, lowered its earnings forecast for the year and signaled that consumers were starting to spend less. Thursday, investors will watch the results of another behemoth of distribution, the leader of the discount Walmart (+0.05% Wednesday).

The Mediterranean-inspired fast food chain Cava, which went public last June, gained 1.06% after rather tasty results. Its turnover rose 18% compared to a number of comparable brands. Cava celebrated a green quarter for the first time with a profit of $6.5 million on sales of $173 million.

Automaker General Motors fell 1.44% after selling its plant in India to Hyundai. Ford also lost 1.46% and Tesla fell 3.16% after again announcing price cuts in China, this time on its Model S and Model X.

The title of newcomer VinFast, Vietnamese manufacturer of electric vehicles, lost ground (-18.75%) after having soared 68% the day before, the day of its introduction on the Nasdaq, to the point of reaching a higher market capitalization than the American GM.

Auto and home insurance giant Progressive stock soared 8.87% after better-than-expected results, pulling other insurance companies like AllState (+4.44%) into the green or Travelers (+1.16%).