Global MarketsWall Street Edges Higher as FOMC Minutes Showed Feds not Ready to Tighten Policy

Stocks on wall street ended higher on Wednesday and the S&P 500 and Nasdaq notched record closing highs after minutes from the last Federal Reserve meeting indicated officials may not be ready yet to move on tightening policy.

According to the minutes of the U.S. central bank’s June policy meeting, Fed officials felt substantial further progress on the economic recovery “was generally seen as not having yet been met,” but agreed they should be poised to act if inflation or other risks materialized.

“I read this as effectively a dovish set of notes simply because they don’t feel as a group that they have enough certainty around the situation to make any changes at all,” said Brad McMillan, chief investment officer at Commonwealth Financial Network in Waltham, Massachusetts.

U.S. Treasuries prices maintained gains on Wednesday, holding down yields, and two stock indexes notched record highs after minutes from the Federal Reserve’s latest meeting largely confirmed market expectations. The dollar remained firm.

The minutes reflected a divided Fed wrestling with new inflation risks but still relatively high unemployment. After its meeting and statement last month, investors began to anticipate the Fed would move more quickly to tighten than previously expected.

Stock prices and bond yields had wobbled earlier on wall street, reflecting fears that the U.S. economic recovery may be slowing, and of the spread of COVID-19 variants. Those factors clouded the view that rates may rise soon to curb inflation, though many investors in any case believe the current inflation signs are temporary.

Wall Street has been concerned about inflation, with investors moving between economy-linked value stocks and growth names in the past few sessions.

Both growth and value stocks gained on Wednesday during trading hours on wall street, while industrials and materials led S&P 500 sector gains.

Wall Street Index Overview

The Dow Jones Industrial Average rose 104.42 points, or 0.3%, to 34,681.79, the S&P 500 gained 14.59 points, or 0.34%, to 4,358.13 and the Nasdaq Composite added 1.42 points, or 0.01%, to 14,665.06.

China’s market regulator said it has fined a number of internet companies including Didi Global, Tencent and Alibaba for failing to report earlier merger and acquisition deals for approval.

U.S.-listed shares of Didi fell 4.6%, adding to a nearly 20% slump on Tuesday. In a sign of nervousness among investors about Didi, index publisher FTSE Russell also warned that it would not include Didi’s shares in its global equity indexes if trading is halted in Wednesday’s session.

Wall Street Didi
Didi Global Inc, one 5 day streaming chart

Declining issues outnumbered advancing ones on the NYSE by a 1.02-to-1 ratio; on Nasdaq, a 1.92-to-1 ratio favored decliners.

The S&P 500 posted 71 new 52-week highs and no new lows on wall street while the Nasdaq Composite recorded 84 new highs and 121 new lows.

Volume on U.S. exchanges was 10.04 billion shares, compared with the 10.7 billion average for the full session over the last 20 trading days.

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