US stocks fall ahead of Fed minutes

Investors have propelled major indices into record territory following signs the economy is recovering and the Federal Reserve does not plan to withdraw its short-term support policies. Government bond yields also fell to their lowest level in more than four months, boosting appetite for assets like growth stocks that offer higher yields.

“It’s really the tech space that has driven the market,” said Esty Dwek, head of global market strategy at Natixis Investment Solutions. “Over the next few weeks and months, hopefully we’ll see US growth hold up well, this will continue to support the markets.”

Government bonds continued to rally, pushing the benchmark 10-year Treasury bond yield down to 1.288%, its lowest level since February, and extending its recent decline into a third day. Yields fall when bond prices rise.

Oil markets have prolonged a volatile period after the Organization of the Petroleum Exporting Countries and its allies failed to agree on a deal to increase production earlier this week. US crude was stable earlier, but has fallen sharply in the past hour. It recently fell 2.1% to $ 71.78 a barrel after suffering its biggest one-day drop since May on Tuesday.

The United States has spoken to OPEC members and is encouraged to reach a deal that allows production to rise, taming soaring oil prices, Jen Psaki, press secretary of the United States, told reporters on Tuesday. the White House.

The Federal Reserve’s minutes of its June meeting, scheduled for 2 p.m. ET, will be reviewed by investors for any discussion among policymakers on when they might ease bond buying programs. Following the June meeting, officials signaled that they plan to hike interest rates by the end of 2023 and discussed a possible reduction in their asset purchases, giving investors a shake-up. markets.

The meeting notes “may not be as hawkish as people expect,” Ms. Dwek said. “They have shown us that they don’t sleep at the wheel and that they watch inflation, but they still expect it to be transient.”

Investors are evaluating signals that the pace of economic growth could slow after weaker-than-expected data from the Institute of Supply Management on Tuesday on the service sector, which fell short of economists’ expectations. This led to the rally in bonds on Tuesday, said Paul Flood, multi-asset fund manager at BNY Mellon Investment Management.

The weaker data “takes some heat away from concerns about tightening policies sooner rather than later,” Flood said. “The fall in bond yields puts the relative opportunity more in favor of the stock markets,” he added.

The number of job postings in May remained stable at 9.2 million, according to the Bureau of Labor Statistics, after April was revised to 9.2 million from 9.3 million. This is mostly in line with economists’ expectations and a sign that the economy remains healthy, but has not fully recovered.

“One of the keys to the future will be the job market. He hasn’t made enough progress for the Fed “to withdraw its stimulus packages, Ms. Dwek said.

Some Chinese companies listed in the United States have extended their losses. Didi Global fell 6.9% and Full Truck Alliance fell 9.6%, after falling on Tuesday. Earlier this week, the cybersecurity regulator in Beijing announced investigations into the data practices of leading tech companies.

Overseas, the pan-continental Stoxx Europe 600 index climbed 0.6%, trading near its all-time high.

The Shanghai Composite Index rose 0.7% at the close of trading, while Japan’s Nikkei 225 fell 1%.

Write to Anna Hirtenstein at [email protected]