Wall Street holds losses after Fed minutes

A screen displays a stock chart at a work station on the floor of the New York Stock Exchange (NYSE) in New York City, US, April 6, 2022. REUTERS/Brendan McDermid

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  • Minutes: Fed ‘generally agreed’ to $95 bln monthly runoff
  • Tech sector sinks, utilities gain
  • Indexes down: Dow 0.5%, S&P 1.00%, Nasdaq 2.08%

April 6 (Reuters) – Wall Street’s main indexes remained weaker on Wednesday after minutes from the Federal Reserve’s March meeting showed plans for the central bank’s phased-in runoff of its balance sheet.

Fed officials “generally agreed” last month to trim $60 billion per month from the US central bank’s Treasury holdings and $35 billion from its holdings of mortgage-backed securities, with the amounts phased in over a period of three months “or modestly longer,” according to the March 15-16 policy meeting minutes. read more

Wall Street’s main indexes had been solidly lower ahead of the minutes’ release, after falling a day earlier when Fed Governor Lael Brainard’s comments raised concerns about more aggressive action by the Fed to fight inflation.

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“The Fed is determined to rein in inflation, and we just hope and pray that there will there will be a soft landing of the economy and not a hard landing that sends us into a recession,” said Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder.

The Dow Jones Industrial Average (.DJI) fell 174.18 points, or 0.5%, to 34,467; the S&P 500 (.SPX) lost 45.19 points, or 1.00%, to 4,479.93; and the Nasdaq Composite (.IXIC) dropped 295.87 points, or 2.08%, to 13,908.29.

Declines were led by technology and other growth shares, with the S&P 500 tech sector (.SPLRCT) down 2.4% and the S&P 500 growth index off 2.1%. The utilities sector (.SPLRCU) gained 1.6%.

Wall Street’s indexes already had been down sharply for a second straight day, as Brainard’s comments on Tuesday sparked fears of aggressive action by the central bank.

Brainard said she expected a combination of interest rate increases and a rapid balance sheet runoff to bring US monetary policy to a “more neutral position” later this year. read more

“She is one of the more dovish members of the FOMC and so for her to come out as aggressively in stamping out inflation pressures with really more aggressive rate tightening and policies, I think that took the market off guard a little bit and I think you are seeing that continue today,” said Anthony Saglimbene, global market strategist at Ameriprise.

The prospect of a more hawkish Fed led to a rocky start to the year for equities, and in particular tech and growth shares whose valuations are more vulnerable to higher bond yields. The Ukraine crisis has added to concerns, particularly about worsening inflation as commodity prices spike.

Declining issues outnumbered advancers on the NYSE by a 3.50-to-1 ratio; on Nasdaq, a 3.20-to-1 ratio favored decliners.

The S&P 500 posted 36 new 52-week highs and 22 new lows; the Nasdaq Composite recorded 30 new highs and 188 new lows.

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Reporting by Lewis Krauskopf in New York, Noel Randewich in San Francisco, Bansari Mayur Kamdar and Praveen Paramasivam in Bengaluru; Editing by Sriraj Kalluvila, Shounak Dasgupta and Richard Chang

Our Standards: The Thomson Reuters Trust Principles.

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