U.S. stocks close mixed as Federal Reserve signals caution on interest rates, investors anticipate Nvidia report

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22nd February 2024 – (New York) The U.S. stock market experienced a mixed session on Wednesday following the release of minutes from the Federal Open Market Committee’s (FOMC) 31st January meeting. The Dow Jones Industrial Average showed resilience, climbing 48.44 points, or 0.13 per cent, to reach 38,612.24. Similarly, the S&P 500 edged up 6.29 points, or 0.13 per cent, closing at 4,981.8. However, the Nasdaq Composite Index faced a slight setback, slipping 49.91 points, or 0.32 per cent, to 15,580.87.

Among the primary sectors within the S&P 500, ten out of eleven ended the day in positive territory. Notably, energy and utilities led the gainers, rising by 1.86 per cent and 1.36 per cent, respectively. Conversely, technology bucked the trend, experiencing a decline of 0.76 per cent.

The recently published minutes from the Federal Reserve’s gathering revealed a cautious approach towards interest rates. Officials conveyed a mix of optimism and prudence concerning inflation, emphasizing that they were not in a rush to reduce rates. The minutes stated, “Participants generally noted that they did not expect it would be appropriate to reduce the target range for the federal funds rate until they had gained greater confidence that inflation was moving sustainably toward 2 per cent.” This sentiment reflects the Fed’s desire for stronger indications of sustainable inflation before making any policy changes.

Richmond Fed President Tom Barkin expressed concerns about the impacts of the latest consumer and wholesale price reports, particularly highlighting the potential challenges arising from the conclusion of the goods price deflation cycle. Barkin commented, “You do worry that when the goods price deflation cycle ends you are going to be left with shelter and services higher than you like.”