June 27, 2022

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Stocks extend losses following back-to-back sell-off

2 min read

U.S. stocks edged lower Thursday as investors continued to mull a hawkish readout of minutes from the Federal Reserve’s last policy-setting meeting that hinted officials were poised to intervene more aggressively to curb inflation.

The Nasdaq Composite extended declines to 1% in midday trading, falling to its lowest level since March 21. The tech-heavy index, which began the week with a 2% pop, capped its second consecutive session Wednesday closing 2.2% lower. Meanwhile, the S&P 500 fell 0.5%, and the Dow Jones Industrial Average shed 200 points. The 10-year Treasury yield climbed again to yield 2.637% — the highest level in three years.

Conversations detailed in the March 15-16 Fed meeting minutes released Wednesday suggested policymakers will soon begin to unwind the central bank’s $9 trillion balance sheet, including $4 trillion in asset purchases amassed to calm markets after the pandemic hit in early 2020. The minutes also indicated many participants in the Federal Open Market Committee (FOMC) “would have preferred a 50 basis point increase” in benchmark interest rates in March, when the Fed raised rates for the first time since 2018.

“When those minutes were actually released this afternoon, I think what you really saw was the solidification around the news that the Fed is very intent on combating inflation,” U.S. Bank senior vice president Lisa Erickson told Yahoo Finance Live.

Economists at Bank of America, which recently modified its Fed call to include 50 basis point rate hikes in June and July, said in a Wednesday note the newly released minutes show enough evidence to tip the scales towards a double bump increase in May.

“The reality is we are in uncharted waters here and the Fed has a difficult task in unwinding the tremendous monetary support over the past couple years,” Allianz Investment Management senior investment strategist Charlie Ripley said in a note. “Against this backdrop, it is highly conceivable that uncertainty in the path of…



2022-04-07 12:09:30

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