Stocks fell as traders awaited the latest Federal Reserve minutes to gauge the direction of monetary policy, with debate growing on the timing for tapering bond purchases.
The S&P 500 retreated after St. Louis Fed President James Bullard said he prefers tapering to be done by the first quarter of 2022, with the last three months of next year being a “logical place” for a rate liftoff. The economy has made “a lot of progress” toward meeting the Fed’s goals on employment and price stability, he added. The dollar advanced.
Several other Fed officials, including Robert Kaplan of Dallas and Esther George of Kansas City, have urged the central bank to begin removing stimulus as soon as the September meeting. Chair Jerome Powell and Vice Chairman Richard Clarida have been among those suggesting they want to see further progress before considering a move to taper.
Fund managers overwhelmingly expect the U.S. central bank to signal tapering before the end of the year, according to a Bank of America Corp. monthly survey. The Fed is due to publish minutes of its July meeting at 2 p.m. Washington time. Next week’s Jackson Hole symposium, however, remains the most likely forum for a major revelation on the future direction of monetary policy.
“More and more Fed officials have tilted hawkish, and so the minutes will be of great interest ahead of the Jackson Hole symposium next week,” wrote Win Thin, a strategist at Brown Brothers Harriman. “We believe the ranks of the hawks will continue to grow.”
Among the corporate highlights, Target Corp. slipped after the retailer’s sales growth slowed in the second quarter, hinting that the heightened consumer demand ushered in by the pandemic may be waning. Lowe’s Cos. jumped as the home-improvement giant raised its full-year forecast. Robinhood Markets Inc., the pioneer of commission-free trading apps, will report earnings for the first time since going public.
Elsewhere, oil slumped after a surprise increase in U.S. gasoline inventories that signaled fuel demand may be under threat as the Covid-19 resurgence threatens the economic recovery.
The Biden administration will start offering booster shots on Sept. 20 to all vaccinated U.S. adults -- a massive expansion to a program previously limited to those with weakened immune systems.
Here are some events to watch this week:
- Bank Indonesia rate decision and Governor Perry Warjiyo briefing Thursday
- U.S. initial jobless claims, leading index Thursday
Some of the main moves in markets:
- The S&P 500 fell 0.2% as of 12:54 p.m. New York time
- The Nasdaq 100 fell 0.1%
- The Dow Jones Industrial Average fell 0.2%
- The MSCI World index was little changed
- The Bloomberg Dollar Spot Index rose 0.1%
- The euro was little changed at $1.1699
- The British pound was little changed at $1.3749
- The Japanese yen fell 0.4% to 109.99 per dollar
- The yield on 10-year Treasuries advanced two basis points to 1.28%
- Germany’s 10-year yield declined one basis point to -0.48%
- Britain’s 10-year yield was little changed at 0.57%
- West Texas Intermediate crude fell 1.2% to $65.80 a barrel
- Gold futures fell 0.2% to $1,784.90 an ounce
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