The major U.S. stock indexes slipped for a second day Wednesday as investors digested the latest Federal Reserve meeting minutes for insights into tapering plans.
The Dow Jones Industrial Average fell 382.59 points, or about 1.1%, to 34,960.69.
The Fed published its meeting minutes from its July gathering, revealing discussions about possibly dialing back its monthly bond-buying program this year.
The minutes noted the economy had reached its goal on inflation and was “close to being satisfied” with the progress of job growth.
To be sure, the minutes also reflected some division within the Fed with some members preferring to wait until early 2022 to start tapering bond purchases.
Since that July meeting, there’s been growing support within the central bank to announce tapering in September and begin it in October
Minutes from the Fed’s July meeting, which showed most policymakers back a wind-down in asset purchases before the end of 2021, prompted a selloff in US equities Wednesday.
In the monthly meeting, Fed officials wanted to emphasize that their decisions on tapering and hiking interest rates would be separate and not depend on the other course of action, Deutsche Bank strategists said.
Still, the Federal Open Market Committee members remained divided on the timing of when to end central bank support
“The Fed is scaling back because it is independent, and the motive for buying bonds was to supply needed liquidity,” Paul Donovan, chief economist at UBS Global Wealth Management said in a Thursday note. “That liquidity is less needed, so bond-buying is less needed.”
Investors will now watch for Fed Chair Jerome Powell’s speech at the Jackson Hole annual symposium next week for fresh clues to the central bank’s moves.
Dow Jones Short (Sell)
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