US close: Stocks mixed as Fed retains option to move early

dl exchange place wall st street pl new york city nyc ny nyse stock exchange dow jones sp nasdaq finance dollar dollars us usa united states of america — Exchange PlaceSharecast photo / Josh White

Wall Street equities closed mixed on Wednesday, although the S&P 500 was in the green for the second consecutive session, as investors pored over the minutes from the Federal Reserve’s most recent meeting.

At the close, the Dow Jones Industrial Average was down 0.16% at 34,934.27 and the Nasdaq Composite was off 0.11% at 14,124.10, while the S&P 500 managed gains of 0.09% to 4,475.01.

The Dow closed 54.57 points lower on Wednesday, taking a bite out of gains recorded in the previous session as the blue-chip index snapped a three-day losing streak.

“January’s FOMC meeting minutes highlight the Fed’s mounting concerns over inflation amid tightening labour markets, accelerating nominal wages, and inflation that is running at multi-decade highs,” said Berenberg’s Mickey Levy.

“Crucially, the January meeting was held prior to the release of January’s employment report and CPI, both of which surprised to the upside.

“In particular, payroll employment gains firmed, suggesting labour markets largely brushed off the impact of the omicron variant and tightened further, while January’s CPI print revealed a further broadening of inflationary pressures into core inflation categories.”

The latest Fed minutes, released earlier in the session, backed up investor expectations that interest rate hikes were fast approaching, as the central bank took a more hawkish tone on rate targets and reduced its balance sheet.

In the minutes from January’s meeting, the Federal Open Market Committee indicated it still expected red-hot inflation to ease, although it was keeping its options open should that not be the case.

“Most participants noted that, if inflation does not move down as they expect, it would be appropriate for the Committee to remove policy accommodation at a faster pace than they currently anticipate,” they said.

Elsewhere, market participants remained focussed on the Russia-Ukraine conflict after NATO officials accused Moscow of continuing to amass troops on the border, just 24 hours after it claimed it was pulling back from the region.

Joe Biden reiterated his vow that the US would defend NATO territory if Russia proceeds.

"We will rally the world," he said, adding that Washington and its allies were prepared to impose powerful sanctions that would undermine Russia's ability to "compete economically and strategically".

On the macro front, US mortgage applications decreased 5.40% in the week ended 11 February, according to the Mortgage Bankers Association, with the refinancing index plunging 8.9% and the purchase index falling 1.2% as prospective buyers were still struggling with elevated sales prices and higher mortgage rates.

In spending, meanwhile, Americans splashed out with reckless abandon at the start of the year according to the Department of Commerce, with retail sales volumes jumping at a month-on-month pace of 3.8% in January to reach $649.8bn.

Economists had pencilled in an increase of 1.8%.

On another note, industrial production increased 4.10% year-on-year in January, following an upwardly revised 3.8% rise in December, with manufacturing increasing 2.5%, mining jumping 8.2% and utilities output rising 9.3%.

Finally, business inventories increased 2.10% month-on-month in December, according to the Census Bureau, while the National Association of Home Builders' housing market index decreased to 82 in February from 83 in January.

In the corporate space, social game developer Roblox Corporation suffered its worst day as a public company, sliding 26.51% after its quarterly numbers disappointed.

Subscription television firm AMC Networks plunged 15.02% even after confirming it had topped nine million streaming subscribers, and posting record full-year revenues

Crocs was 6.35% weaker after the maker of questionably fashionable rubber footwear posted fourth quarter earnings of $154.9m, while hotelier Hilton Worldwide was 1.05% lower after it topped estimates amid a bounce-back in holiday travel demand.

E-commerce cloud operator Shopify tumbled 16.04% after it warned of slowing sales growth in 2022, as pandemic-fuelled online spending was forecast to ease off.

On the upside, food producer Kraft Heinz was 5.59% firmer after an earnings beat on the back of increased prices, and Google owner Alphabet managed gains of 0.84% after it took the wraps off new privacy settings to be rolled out to Android phones.

Artificial intelligence (AI) lending technology developer Upstart Holdings rocketed 35.65% as the fintech announced a fresh round of buybacks after it blasted through earnings expectations.

Domestic carrier Alaska Air Group ascended 0.67% after it announced a new subscription product, offering a certain number of flights for fixed monthly pricing in Arizona, California and Nevada.

Dow Jones - Risers

Walt Disney Co. (DIS) $156.35 1.05%
Procter & Gamble Co. (PG) $158.01 0.76%
Nike Inc. (NKE) $146.47 0.63%
Boeing Co. (BA) $218.93 0.55%
Visa Inc. (V) $228.82 0.44%
Travelers Company Inc. (TRV) $172.28 0.39%
Unitedhealth Group Inc. (UNH) $480.29 0.38%
Dow Chemical Co. (DOW) $62.08 0.36%
American Express Co. (AXP) $198.38 0.20%
JP Morgan Chase & Co. (JPM) $155.00 0.18%