[New York Stock Market] Weakness on 'Tightening' FOMC Minutes... Dow Down 0.26%

[Asia Economy New York=Special Correspondent Joselgina] The U.S. New York stock market closed mixed near the flat line on the 22nd (local time) as it digested the February Federal Open Market Committee (FOMC) minutes, which indicated the need to continue raising the benchmark interest rate.

On the New York Stock Exchange (NYSE) that day, the Dow Jones Industrial Average fell 84.50 points (0.26%) from the previous session to close at 33,045.09. The large-cap focused S&P 500 index recorded 3,991.05, down 6.29 points (0.16%). Meanwhile, the tech-heavy Nasdaq index closed up 14.77 points (0.13%) at 11,507.07.

The New York stock market started higher while awaiting the FOMC minutes, showed volatility, and then slipped following the release of the minutes at 2 p.m. Afterward, just before the close, only the Nasdaq among the three major indices managed to rebound, turning to a slight gain. Bloomberg reported, "After the Federal Reserve signaled further rate hikes, the market did not gain enough momentum to sustain the rebound."

Within the S&P 500, nine sectors except discretionary consumer goods and materials declined. Real estate stocks fell more than 1%, and energy stocks also underperformed due to the decline in international oil prices. By individual stocks, Intel announced a cut of its quarterly dividend from $0.365 per share to $0.125 per share, a reduction of over 60%, and fell 2.26% from the previous close. Cybersecurity company Palo Alto Networks rose more than 12% after beating Wall Street expectations and raising its full-year earnings guidance. Amazon rose 1.28% on the announcement of its acquisition deal with One Medical. On the other hand, Costa Group dropped more than 5% due to disappointing quarterly guidance.

[Image source=Reuters Yonhap News]

Investors closely watched the February FOMC minutes and remarks from Fed officials that day. They sought to confirm the committee members' assessments of inflation and the economic situation and to gain hints about the future magnitude and duration of rate hikes.

James Bullard, president of the Federal Reserve Bank of St. Louis and a prominent hawk within the Fed, appeared on CNBC's Squawk Box that morning, stating that the U.S. economy is stronger than expected and supporting more aggressive rate hikes. Having previously left open the possibility of a 0.5 percentage point "big step" in March, he reiterated his view that rates should go above 5% and that the benchmark rate should be raised as soon as possible to around 5.375%.

The FOMC minutes released that afternoon noted signs that inflation is declining but not sufficiently, and that rate hikes should continue. Participants agreed that the labor market remains very tight, exerting persistent upward pressure on wages and prices. Notably, the minutes confirmed that the 0.25 percentage point hike at the February FOMC was not unanimous, with some minority members advocating a 0.5 percentage point increase.

Earlier, at the FOMC meeting held from January 31 to February 1, the Fed raised the benchmark interest rate by 0.25 percentage points to 4.5?4.75%. However, to assess the cumulative effects of tightening, the Fed reduced the hike size from 0.5 to 0.25 percentage points, signaling a slowdown in the pace of increases.

Mike Lowengart of Morgan Stanley Global Investment said, "The conclusion is that the market headwinds have not disappeared," adding, "Investors should expect continued volatility." Quincy Crosby, senior market strategist at LPL Financial, commented, "The FOMC minutes included much that investors had already priced in," and noted, "Upcoming economic data such as the Personal Consumption Expenditures (PCE) report on the 24th will be important."

Accordingly, investors are expected to monitor economic indicators released before the March FOMC and remarks from Fed officials to anticipate the future tightening path. Shortly after the market close, John Williams, president of the New York Fed and the Fed's third-ranking official, will speak. Later this week, speeches are scheduled by Raphael Bostic, president of the Atlanta Fed, and Philip Jefferson, Fed governor. On the 23rd, the revised U.S. fourth-quarter GDP growth rate will be announced. The preliminary figure released last month showed a relatively solid annualized growth of 2.9%, and the revision is expected to be minor. The January PCE price index, to be released on the 24th, is estimated to have risen 4.3% year-over-year and 0.4% month-over-month.

Amid tightening concerns, the dollar rose slightly. The dollar index, which measures the dollar's value against six major currencies, increased more than 0.3% to around 104.5. In the New York bond market, the 10-year U.S. Treasury yield fell slightly to about 3.92%. The 2-year yield, sensitive to monetary policy, traded around 4.69%. A decline in Treasury yields indicates a rise in bond prices.

Corporate earnings announcements continue. Following profit warnings from companies like Home Depot the previous day, only 68% of S&P 500 companies that have reported so far beat Wall Street estimates for quarterly earnings. After the market close that day, Nvidia and eBay are scheduled to release earnings.

On the same day, tensions between the U.S. and Russia persisted ahead of the one-year anniversary of the Ukraine war outbreak. President Joe Biden, visiting Poland after Kyiv, criticized Russian President Vladimir Putin's announcement the previous day to suspend the U.S.-Russia nuclear arms control agreement "New START" as a "big mistake." He also reaffirmed the U.S. commitment to defend every inch of NATO territory.

International oil prices fell for the sixth consecutive trading day amid ongoing tightening concerns. On the New York Mercantile Exchange, April delivery West Texas Intermediate (WTI) crude oil closed at $73.95 per barrel, down $2.41 (3.16%) from the previous session.