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Wall Street ended lower on Wednesday, led by decline in tech and other growth stocks. There were concerns about the released FOMC minutes from a meeting in March, which revealed that the Fed officials are planning to shrink their balance sheet from the month of May. All the three major stock indexes ended in negative territory.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) fell 0.4% or 144.7 points to close at 34,496.51. Fifteen components of the 30-stock index ended in the red zone, while fifteen remained in green.
The tech-heavy Nasdaq Composite dropped 2.2% or 315.35 points to close at 13,888.82, due to sharp decline in tech-stocks.
The S&P 500 lost 1% or 43.97 points to end at 4,481.15. Six out of the 11 broad sectors of the benchmark index closed in the red zone.
The Consumer Discretionary Select Sector SPDR (XLY), the Technology Select Sector SPDR (XLK) and the Communication Services Select Sector SPDR (XLC) went down 2.6%, 2.4% and 1.9%, respectively, while The Utilities Select Sector SPDR (XLU) rose 2%.
The fear-gauge CBOE Volatility Index (VIX) was up 1.1% to 22.10. A total of 12.6 billion shares were traded on Wednesday, lower than the last 20-session average of 13 billion. Decliners outnumbered advancers on the NYSE by a 2.76-to-1 ratio. On Nasdaq, a 2.56-to-1 ratio favored declining issues.
FOMC Minutes Signal Imminent Reduction of Balance Sheet
Minutes of the Fed FOMC meeting held on March 15 and 16 were released on Wednesday. It showed that the officials had reached consensus of reducing approximately $95 billion a month from the central bank’s asset holding. There was general agreement that $60 billion in Treasurys and $35 billion in mortgage-backed securities would be allowed to roll off, phased in over three months, starting in May.
In addition to this, officials also discussed about rapid pace of interest rate hikes to tackle inflation. Their plans are not only to raise the target policy rate to half of a percentage point but also to push it to a "neutral posture," approximately 2.4%. The markets reacted grimly to this report as there were concerns that these plans would lead to a major slow-down of the economy, sending it to recession. Tech-stocks and growth stocks were the biggest losers, as investors rotated out of the sectors with interest rate hikes undermining their valuation.
On Wednesday, the 10-year Treasury note yield closed at 2.61%, putting the benchmark rate well above the 2-year bond, which traded around 2.5%. Investors kept monitoring the bond market as the 2-year bond had recently been hovering above the 10-year triggering a yield curve inversion, which is often seen as a precursor of recession.
Further Sanctions on Russia
The United States, the Group of Seven nations and the European Union announced further sanctions on Wednesday to punish Moscow for its invasion of Ukraine. New measures include a ban on all new investment in Russia. Sanctions were also announced on two major Russian banks, President Vladimir Putin’s two adult daughters, and on the wife and daughter of Foreign Minister Sergey Lavrov.
Economic Data
U.S. commercial crude oil inventories increased by 2.4 million barrels in the week ending April 1, 2022. In the previous week, inventories had gone down by 3.4 million barrels.
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Stock Market News for Apr 7, 2022
Wall Street ended lower on Wednesday, led by decline in tech and other growth stocks. There were concerns about the released FOMC minutes from a meeting in March, which revealed that the Fed officials are planning to shrink their balance sheet from the month of May. All the three major stock indexes ended in negative territory.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) fell 0.4% or 144.7 points to close at 34,496.51. Fifteen components of the 30-stock index ended in the red zone, while fifteen remained in green.
The tech-heavy Nasdaq Composite dropped 2.2% or 315.35 points to close at 13,888.82, due to sharp decline in tech-stocks.
The S&P 500 lost 1% or 43.97 points to end at 4,481.15. Six out of the 11 broad sectors of the benchmark index closed in the red zone.
The Consumer Discretionary Select Sector SPDR (XLY), the Technology Select Sector SPDR (XLK) and the Communication Services Select Sector SPDR (XLC) went down 2.6%, 2.4% and 1.9%, respectively, while The Utilities Select Sector SPDR (XLU) rose 2%.
The fear-gauge CBOE Volatility Index (VIX) was up 1.1% to 22.10. A total of 12.6 billion shares were traded on Wednesday, lower than the last 20-session average of 13 billion. Decliners outnumbered advancers on the NYSE by a 2.76-to-1 ratio. On Nasdaq, a 2.56-to-1 ratio favored declining issues.
FOMC Minutes Signal Imminent Reduction of Balance Sheet
Minutes of the Fed FOMC meeting held on March 15 and 16 were released on Wednesday. It showed that the officials had reached consensus of reducing approximately $95 billion a month from the central bank’s asset holding. There was general agreement that $60 billion in Treasurys and $35 billion in mortgage-backed securities would be allowed to roll off, phased in over three months, starting in May.
In addition to this, officials also discussed about rapid pace of interest rate hikes to tackle inflation. Their plans are not only to raise the target policy rate to half of a percentage point but also to push it to a "neutral posture," approximately 2.4%. The markets reacted grimly to this report as there were concerns that these plans would lead to a major slow-down of the economy, sending it to recession. Tech-stocks and growth stocks were the biggest losers, as investors rotated out of the sectors with interest rate hikes undermining their valuation.
Consequently, stocks like Marvell Technology, Inc. (MRVL - Free Report) and JetBlue Airways Corporation (JBLU - Free Report) fell 2.7% and 8.7%, respectively. Marvell Technology carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The 10-year Treasury Bond Keeps Reversing Course
On Wednesday, the 10-year Treasury note yield closed at 2.61%, putting the benchmark rate well above the 2-year bond, which traded around 2.5%. Investors kept monitoring the bond market as the 2-year bond had recently been hovering above the 10-year triggering a yield curve inversion, which is often seen as a precursor of recession.
Further Sanctions on Russia
The United States, the Group of Seven nations and the European Union announced further sanctions on Wednesday to punish Moscow for its invasion of Ukraine. New measures include a ban on all new investment in Russia. Sanctions were also announced on two major Russian banks, President Vladimir Putin’s two adult daughters, and on the wife and daughter of Foreign Minister Sergey Lavrov.
Economic Data
U.S. commercial crude oil inventories increased by 2.4 million barrels in the week ending April 1, 2022. In the previous week, inventories had gone down by 3.4 million barrels.