Stocks sank on Wednesday, with investors digesting the Federal Reserve’s meeting minutes signaling officials were increasing discussions over the start of tapering their asset purchase program.
The S&P 500 sank, posting a back-to-back session of declines. The Dow dropped more than 300 points, or 1%, and accelerated to the downside in the final half-hour of trading as concern over a quicker-than-expected shift to monetary policy spooked the markets.
The Fed’s meeting minutes added to a slew of mixed economic and corporate earnings data, all of which weighed on investor sentiment. A disappointing U.S. retail sales report from the Commerce Department served as a key source of concern for equity traders, with sales dropping 1.1% in July versus the 0.3% dip expected. Housing starts also fell more than expected last month, posting the biggest monthly decline since April. Sales slowdowns at retailers from Home Depot (HD) to Target (TGT) compared to last year also appeared to vindicate traders’ concerns that economic activity and profit growth may slow from here.
Investors also considered the Federal Open Market Committee’s (FOMC) latest meeting minutes, offering market participants more hints on when the central bank might announce and implement tapering of its crisis-era asset purchase program. The timing and scope of the eventual roll-back of the Fed’s highly accommodative monetary policies have been key questions going forward for the markets.
But despite some of the lingering uncertainties in markets on the Delta variant and policy fronts, many strategists remain constructive overall on the path forward for equities.
“You’re seeing a lot of economists and strategists on Wall Street now looking for some sort of catalyst here to get a sell-off, because we are going into what you would call the weaker part of the year for the market historically,” Ryan Payne, Payne Capital Management president, told Yahoo Finance. “But if you look at the overall economic data, if you look at profits this quarter, it’s kind of hard not to be bullish here.”
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4:05 p.m. ET: Dow drops 383 points, or 1.1%, in back-to-back day of declines after Fed minutes signal more talk on tapering
Here were the main moves in markets as of 4:05 p.m. ET:
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S&P 500 (^GSPC): -47.81 (-1.07%) to 4,400.27
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Dow (^DJI): -382.59 (-1.08%) to 34,960.69
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Nasdaq (^IXIC): -130.27 (-0.89%) to 14,525.91
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Crude (CL=F): -$1.66 (-2.49%) to $64.93 a barrel
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Gold (GC=F): +$0.10 (+0.01%) to $1,787.90 per ounce
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10-year Treasury (^TNX): +1.5 bps to yield 1.2730%
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2:00 p.m. ET: Fed policymakers reaffirm transitory view on price increases in July meeting minutes
Federal Reserve policymakers reaffirmed their view that recent price increases and inflationary pressures were transitory and would ultimately pass, and suggested that their timing on rolling back their asset purchase would depend largely on the pace of the ongoing recovery in the labor market. Some officials flagged the Delta variant as a potential confounding factor in the pace of the economic rebound.
But in terms of reaching substantial further progress toward the Fed’s goals of achieving price stability and full employment, “Most participants remarked that this standard had been achieved with respect to the price stability goal,” according to the minutes.
“A few participants expressed concerns that maintaining highly accommodative financial conditions might contribute to a further buildup in risk to the financial system that could impede the attainment of the Committee’s dual-mandate goals. In contrast, a few other participants suggested that preparations for reducing the pace of asset purchases should encompass the possibility that the reductions might not occur for some time and highlighted the risks that rising COVID-19 cases associated with the spread of the Delta variant could cause delays in returning to work and school and so damp the economic recovery,” the minutes added.
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10:38 a.m. ET: Biden administration announces plan to begin offering booster vaccine shots next month as Delta variant spreads
Top public health officials of the Biden administration announced Wednesday that they are recommending booster COVID-19 vaccine shots to help increase Americans’ protection against COVID variants.
The booster shot would entail a third dose of the vaccine eight months after individuals received their second shot of the Pfizer or Moderna vaccine. These doses would begin in late September. The plan would still need to be evaluated by the Food and Drug Administration for safety and efficacy.
Officials are still awaiting data to determine actions for those who received the single-dose Johnson & Johnson vaccine, though they have suggested they will likely also need additional shots.
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9:31 a.m. ET: Stocks open lower, extending Tuesday’s declines
Here’s where markets were trading shortly after the opening bell:
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S&P 500 (^GSPC): -10.47 (-0.24%) to 4,437.61
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Dow (^DJI): -116.26 (-0.33%) to 35,227.02
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Nasdaq (^IXIC): -17.21 (-0.12%) to 14,646.99
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Crude (CL=F): +$0.61 (+0.92%) to $67.20 a barrel
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Gold (GC=F): +$2.40 (+0.13%) to $1,790.20 per ounce
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10-year Treasury (^TNX): +1.5 bps to yield 1.273%
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8:46 a.m. ET: Housing starts slid by the most since April last month
New homebuilding fell much more than expected in July as materials shortages and labor scarcities restricted overall housing market activity.
Housing starts fell 7.0% in July, the Commerce Department said on Wednesday, which marked the biggest monthly drop since April. Consensus economists were looking for a 2.6% decline, according to Bloomberg data. In June, housing starts had risen at a 3.5% rate. Starts for single-family homes fell 4.5%, contributing heavily to the decline.
Building permits, however, came in faster than expected, signaling a pick-up in homebuilding down the line. These rose at a 2.6% monthly rate, or more than double the pace anticipated. That followed a 5.3% drop during the prior month.
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7:30 a.m. ET: Stock futures point to a mixed open amid retail earnings
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S&P 500 futures (ES=F): -3.5 points (-0.08%) at 4,440.00
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Dow futures (YM=F): -72.00 points (-0.2%) to 35,187.00
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Nasdaq futures (NQ=F): +14.25 points (+0.1%) to 15,011.75
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Crude (CL=F): +$0.64 (+0.96%) to $67.23 a barrel
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Gold (GC=F): -$1.60 (-0.09%) to $1,786.20 per ounce
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10-year Treasury (^TNX): +1.7 bps to yield 1.275%
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7:28 a.m. ET: Lowe’s tops Q2 earnings, sales estimates and raises guidance despite home-improvement slowdown
Lowe’s (LOW) shares gained in the pre-market session after the company topped second-quarter earnings and sales expectations and raised its forecast for the full-year, even as consumer demand for home improvement projects moderated from the past year’s peak.
Adjusted earnings of $4.25 per share were better than the $4.01 expected, according to Bloomberg consensus data. And though comparable sales fell 1.6% and turned negative compared to the 34.2% growth rate posted last year, the print was still better-than-feared, with analysts having looked for a 1.9% drop in same-store sales. Lowe’s also upgraded its full-year revenue forecast, saying it expected to bring in about $92 billion in sales for comparable sales growth of 30% on a two-year basis.
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7:15 a.m. ET: Target shares dip after Q2 earnings beat fails to impress Wall Street
Target (TGT) posted second-quarter sales and profits that topped consensus expectations, but shares still fell in the pre-market session as the report failed to impress those looking for a bigger beat.
The retailer posted comparable same-store sales growth of 8.9%, which was better than the 8.2% rate consensus analysts were looking for, according to Bloomberg data. However, this came down significantly from the 24.3% growth in the same quarter last year, when stay-in-place orders were at their height in the U.S. and shoppers turned in droves to one-stop big-box retailers. Digital sales rose 10%, compared to 195% growth in the same period last year.
Still, Target issued upbeat commentary about the second half of the year, even as the Delta variant’s spread threatens to weigh on consumer sentiment and spending further.
“While the current environment remains volatile, our results over the last 18 months have proven conclusively that our team and operating model can seamlessly adapt to changes in the environment, and we’re well-positioned to deliver outstanding performance in the back half of the year,” Target Chairman and CEO Brian Cornell said in a press statement.
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6:15 p.m. ET Tuesday: Stock futures edge lower
Here’s where markets were trading Tuesday evening:
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S&P 500 futures (ES=F): -5.5 points (-0.12%) at 4,438.00
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Dow futures (YM=F):-54.00 points (-0.15%) to 35,205.00
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Nasdaq futures (NQ=F): -25.25 points (-0.17%) to 14,972.25
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Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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