U.S. stocks retreat as investors digest Fed minutes and await Nvidia earnings

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23rd May 2024 – (New York) U.S. stocks closed lower on Wednesday as market participants digested the hawkish minutes of the Federal Reserve’s early May policy meeting and eagerly awaited Nvidia Corp.’s quarterly earnings report.

The Dow Jones Industrial Average declined by 201.95 points, or 0.51 per cent, settling at 39,671.04. The S&P 500 slipped 14.40 points, or 0.27 per cent, to 5,307.01. The Nasdaq Composite Index shed 31.08 points, or 0.18 per cent, closing at 16,801.54.

Among the primary S&P 500 sectors, eight ended the day in negative territory. Energy and utilities took the lead among the decliners, with losses of 1.83 per cent and 1.18 per cent, respectively. On the other hand, health and industrials sectors led the gainers, rising by 0.20 per cent and 0.15 per cent, respectively.

The release of minutes from the April 30-May 1 Federal Open Market Committee policy meeting unveiled concerns among policymakers regarding the appropriate timing for monetary policy adjustments.

According to the minutes, “Participants observed that while inflation had eased over the past year, in recent months there had been a lack of further progress toward the committee’s 2 per cent objective. The recent monthly data had showed significant increases in components of both goods and services price inflation.”

The minutes also indicated that “various participants mentioned a willingness to tighten policy further should risks to inflation materialize in a way that such an action became appropriate.” However, Fed officials, including Fed Chair Jerome Powell and Governor Christopher Waller, have expressed doubts about the possibility of an imminent rate hike.

In other news, the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey reported a 1.9 per cent increase in applications for the week ending May 17 compared to the previous week. This rise corresponded to a 1.9 per cent increase in the MBA’s Market Composite Index, which measures application volume. On an unadjusted basis, the index rose by 1.1 per cent from the prior week, marking the third consecutive weekly increase.

Rich Steinberg, Chief Market Strategist at the Colony Group, highlighted the market’s high expectations for Nvidia’s quarterly results, which were due later in the day. He also noted that the Fed minutes suggested not all members of the rate-setting committee have ruled out the possibility of further rate hikes.

“People are taking profits to see where they can re-enter,” Steinberg commented, noting some signs of rotation within the Dow Jones Industrial Average. “If Nvidia does not come through, you’ll see that reflected in Apple, Salesforce, and other tech names, in particular.”