Stocks slip following FOMC minutes
US stocks ended with strong losses at Wall Street on Wednesday, 21 August 2013. Stocks slipped as investors weighed the Federal Reserve's signaling that it remained on course to curb its monthly bond purchases by the end of the year.
The Dow Industrial ended at 14,897.55, down 105.44 points, or 0.7%. The S&P 500 index lost 9.55 points, or 0.6%, to 1,642.80. The Nasdaq Composite retreated 13.80 points, or 0.4%, to 3,599.79.
All ten sectors registered losses with rate-sensitive telecom services and utilities leading to the downside. Only energy, health care, and technology sectors outperformed the broader market.
Although the minutes from the July meeting offered few changes from prior statements, they did indicate broad support for Chairman Bernanke's timeline, which would likely call for tapering as early as September. However, this was coupled with cautious comments regarding the labor market as the minutes noted, "The June employment report showed continued solid gains in payrolls. Nonetheless, the unemployment rate remained elevated, and the continuing low readings on the participation rate and the employment-to-population ratio, together with a high incidence of workers being employed part time for economic reasons, were generally seen as indicating that overall labor market conditions remained weak."
Overall, the minutes did not provide a clear-cut signal regarding the Fed's tapering schedule and the mixed reaction across markets suggests a certain level of uncertainty remains present.
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Among major stocks under focus today, Staples fell 15% after the office-supply retailer reported disappointing results and trimmed its 2013 earnings and revenue forecasts. Lowe's rallied 3.9% after the home-improvement chain reported a larger-than-estimated rise in quarterly profit and sales and hiked its yearly outlook. Shares of Target slipped 3.6% after the discount retailer reported a drop in second-quarter profit
Today's economic data focused on housing. The weekly MBA Mortgage Index remained in a downtrend with today's 4.6% fall marking the thirteenth decline out of the past fifteen readings including last week's 4.7% slide.
In addition, July existing home sales rose 6.5% to 5.39 million from a downwardly revised 5.06 million (from 5.08 million) in June. The consensus expected existing home sales to increase to 5.10 million. Sales are at their highest point since November 2009 when the impending expiration of the homebuyer tax credit pulled forward a large number of existing home purchases.
Precious metals traded lower on Wednesday, 21 July 2013 as investors awaited the 14:00 ET release of the FOMC Minutes and as the stronger dollar pressured prices. Comex gold for December delivery fell to a session low of $1361.10 per ounce but erased most of the earlier losses, settling 0.1% lower at $1370.00 per ounce. Sep silver brushed a session low of $22.88 per ounce and eventually settled at $22.97 per ounce, or 0.3% lower.
Crude Oil futures on Wednesday, 21 August 2013 marked their third straight session decline, with prices sinking back below $104 a barrel after the release of the Federal Reserve's July meeting minutes. Oil traders also assessed a U.S. government report, which showed a fall in crude supplies that was a bit more than expected, along with a sizable drop in gasoline inventories.
October crude oil fell $1.26, or 1.2%, to settle at $103.85 a barrel on the New York Mercantile Exchange. It was trading at about $104.10 before the Fed minutes were released a half hour ahead of the Nymex close.
In the latest weekly inventory report, EIA reported a fall of 1.4 million barrels in crude stockpiles for the week ended 16 August 2013. That was slightly more than expected, as market was looking for a 1 million-barrel decline. The EIA also reported a 900,000-barrel climb in distillate stockpiles, which include heating oil. That compared to expectations for an increase of 1 million barrels.
For every share rising, roughly three fell on the New York Stock Exchange, where 657 million shares traded. Composite volume exceeded 2.9 billion.
Tomorrow, weekly initial claims will be reported at 8:30 ET while the June FHFA Housing Price Index and July Leading Indicators will be announced at 9:00 ET and 10:00 ET, respectively.
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