What will the Fed Minutes on 19th August 2015 be?
A long waited interest hike?
U.S. stocks fell for a second day as a selloff in emerging markets fueled concern global growth is slowing at the same time the Federal Reserve considers the path for higher interest rates.
Caterpillar Inc., DuPont Co. and Freeport-McMoRan Inc. paced declines as raw-material and industrial shares slumped more than 1.2 percent as a group. Chevron Corp. slid 2.3 percent and Marathon Oil Corp. lost 4.1 percent after a government report showed U.S. crude stockpiles increased.
The Standard & Poor’s 500 Index fell 1 percent to 2,075.34 at 10:54 a.m. in New York, falling below its average price for the past 200 days for the third time this month. The Dow Jones Industrial Average lost 197.39 points, or 1.1 percent, to 17,313.95, with all 30 components retreating. Trading in S&P 500 companies was 9 percent below the 30-day average for this time of the day.
“There’s a lot of uncertainty around the outlook for the market here,” said Walter Todd, who oversees about $1.1 billion as chief investment officer for Greenwood Capital Associates. “You’ve got the Fed meeting coming up. There’s still a lot of uncertainty around China. Earnings have been OK, but not great. You’ve seen the market bouncing around in the range lately. There’s a lack of clarity here.”
Emerging-market equities sank to a four-year low on concern investors will withdraw money faster as the Chinese economy slows. European stocks also followed suit.
Concerns about global growth are increasing as the Fed considers the timing of its first interest rate increase since 2006. Minutes from the central bank’s July meeting are due at 2 p.m. in Washington. Traders are pricing in a 48 percent probability of a rate move at the September meeting.
When its last meeting ended July 29, the
That got Wall Street thinking that the Fed would move at its September 15-16 meeting. Today’s release of the minutes of the Fed’s July meeting could offer more clues related to its rate hike “liftoff” timetable.
“At the time of the July meeting, there was a higher expectation that they would move in September,” says
Warne added that it would not surprise her if the minutes “reaffirmed the view” of a September hike “unless we see weak employment growth” in the August jobs report set for release Sept. 4.
But there’s a catch, she says: “Since the July meeting there’s been a lot more international turbulence.” Warne, of course, is referring to the market angst sparked last week by China’s decision to devalue its currency and the continued selloff in oil prices.
“The question will be: Does weakness in China and international disruptions make it more likely the Fed stays on hold, as in the past the Fed has commented on international conditions as weighing” on its deliberations, Warne says.
However, she still believes the Fed is more focused on domestic issues, such as the strengthening labor market and better growth numbers in the U.S.