The Dow Jones Industrial Average (DJI) dropped roughly 80 points, or 0.3%, while the S&P 500 (GSPC) fell 0.2%. With a 0.1% gain, the technologically significant Nasdaq Composite (IXIC) stood out.
“Participants concurred that the Federal Open Market Committee had made significant progress over the past year in moving towards a sufficiently restrictive stance of monetary policy,” the minutes stated.
“However, participants agreed that while there were signs that the Committee’s overall tightening of monetary policy had started to moderate inflationary pressures, inflation remained well above the Committee’s longer-run goal of 2% and the labour market remained extremely tight.”
The majority of members liked the lesser rise of 0.25% made during the most recent policy decision, although some in the group preferred boosting rates by 50 basis points, according to discussions.
In a speech last week, Cleveland Fed President Loretta Mester said that she would have preferred the larger boost but that policymakers did not want to shock the markets, which were pricing in 0.25%.
The worst of the inflation may be behind us, but it is still significantly higher than the Federal Reserve’s target, according to Mike Loewengart, head of model portfolio construction at Morgan Stanley’s Global Investment Office. The bottom message is that there are still a lot of market headwinds, and investors should anticipate continued volatility as they consider the effects of rates remaining higher for longer.
In a televised interview with CNBC earlier in the day, James Bullard, president of the St. Louis Fed, stated that for the federal funds rate to be brought back down to its 2% target, it needs be in the range of 5.25% to 5.5%.
Banks on Wall Street have updated their forecasts for forthcoming rate increases by the Federal Reserve. Last Monday, teams at Goldman Sachs and Bank of America stated that they anticipate three additional rate increases in 2018. Some market players believed that the Fed’s rate hike cycle was about to come to an end before the interest rate increase in February.
Even though the cryptocurrency exchange reported fourth-quarter results that exceeded Wall Street projections and losses for the whole year that were less than anticipated, Coinbase (COIN) was among the movers on Wednesday, dropping 1.4%.
In other specific names, Palo Alto Networks (PANW) shares soared 12.5% following the cybersecurity company’s announcement that it was striving to control expenses and an increase in its annual profit projection.
The fourth quarter earnings for Chinese search engine Baidu (BIDU) were better than anticipated because to growth in its cloud, advertising, and artificial intelligence areas. The session ended with shares down 2.6% as they reversed earlier-day gains.
After the Allegheny County Employees’ Retirement System filed a class action lawsuit in Delaware, accusing the movie theatre chain of creating preferred shares without their consent, the meme stock favourite AMC Entertainment (AMC) came under scrutiny. Shares increased 2.4%.
Treasury yields on the bond market were stable early in the day after abruptly increasing to their highest levels since November on Tuesday.
The swings come as investors shift their expectations to higher interest rates for a longer period of time. On Tuesday, the S&P 500 nosedived 2% below 4,000, the Dow lost 700 points, and the Nasdaq fell 2.5%.