NEW YORK (AFP) – The S&P 500 and Nasdaq edged to fresh records on Wednesday (July 7) as the markets digested Federal Reserve minutes signalling a policy change was coming but not imminent.
Minutes of the Fed’s policy meeting last month acknowledged that inflation had outpaced expectations and the central bank will need to be ready to pull back on its massive bond-buying programme.
But the Fed did not provide clues on when the shift would happen, and as the stance was consistent with commentary from Fed chairman Jay Powell it did not jolt the market.
The Dow Jones Industrial Average added 0.3 per cent at 34,681.79.
The broad-based S&P 500 also advanced 0.3 per cent to 4,358.13, narrowly topping a prior record, while the tech-rich Nasdaq Composite edged up by less than 0.1 per cent to 14,665.06 for a third straight record.
FHN Financial’s Chris Low said the Fed’s minutes reflected the central bank’s desire to communicate future policy changes.
The central bank “is taking no chances anyone might read these minutes and think policy change is imminent”, Mr Low said.
The economy “is recovering faster than participants expected,” but there is not yet enough progress “to justify a policy change”, he said.
Besides the Fed, investors kept an eye on the yield of the 10-year US Treasury, which continued to decline – something the Fed minutes indicated is expected to continue.
Analysts have debated the significance of the decline, seeing the pullback as reflective of ebbing concerns about inflation. But the drop in yields may also signify stocks have gotten overly enthusiastic about the growth outlook.
