NEW YORK: Wall Street stocks finished a volatile session lower on Wednesday (April 12) after minutes showed US Federal Reserve (Fed) economists in March projected a “mild recession”.
Equities resumed a downward track following the afternoon disclosure, which shed light on the central bank’s March 22 decision.
“The staff’s projection ... included a mild recession starting later this year, with a recovery over the subsequent two years,” according to the minutes.
The minutes suggest that “Fed officials are getting a little more nervous about the outlooks and the overall impact of the current banking turmoil”, said Oanda’s Edward Moya, who also pointed to nervousness ahead of bank industry earnings later in the week.
All three major US stock indices seesawed throughout the session to close in negative territory.
“The minutes were clear that there’s ongoing Fed concern with respect to the banking crisis as well as elevated prices,” said Greg Bassuk, CEO of AXS Investments here.
“This week is an inflection point as investors are searching for surer footing in advance of corporate earnings and the PPI (producer prices) report coming out tomorrow,” he said.
“(Economic) data has been very mixed so investors are overacting to any positive or negative hint of Fed rate hike policy. Volatility will continue, investors will have to buckle their seatbelts. There’s so much going on now causing uncertainty for both Wall Street and Main Street.”
The Dow Jones Industrial Average fell 38.29 points, or 0.11%, to 33,646.50; the S&P 500 lost 16.99 points, or 0.41%, at 4,091.95; and the Nasdaq Composite dropped 102.54 points, or 0.85%,
to 11,929.34.
Earlier, markets digested US data that showed the rate of inflation year-over-year fell to 5% in March from 6% in February, the smallest 12-month increase since May 2021.
Despite the positive headline figure, analysts noted that inflation remains well above the Fed’s 2% target and pointed out the report was less impressive when food and energy prices were stripped out.
A note from Oxford Economics said the latest data keeps a Fed interest rate increase “clearly on the table for May”, but increases the odds of a pause in June. – AFP, Reuters