In a volatile midday trading session on Wednesday, US equity indexes demonstrated modest gains following a report from the Bureau of Labor Statistics, which signaled a downward revision in labor market data, stirring investor anticipation for the Federal Reserve's upcoming July meeting minutes. The S&P 500 and the Nasdaq Composite registered a 0.3% increase each, closing at 5,613.2 and 17,867.4 points respectively, while the Dow Jones Industrial Average inched up 0.1% to reach 40,871.4.
Earlier in the session, these indexes had dipped into negative territory, but a shift towards bullish trading sentiment saw consumer discretionary and utilities outperform intraday. Conversely, the financial sector faced the steepest decline during the session. The Bureau of Labor Statistics revealed a preliminary estimate indicating an annual benchmark revision that signals an 818,000 adjustment downward, translating to a 0.5% reduction.
This insight adds another layer of complexity to the market as investors grapple with the implications. During the Federal Open Market Committee's meeting held on July 30-31, the federal funds rate remained unchanged, confined to a range of 5.25%-5.5%. However, the tone of the discussions hinted at increasing concerns regarding the adverse effects that heightened rates could impose on the job market.
Investors are eagerly awaiting the release of the meeting minutes this afternoon, which are expected to provide clarity and deeper insights into the policy discussions that led to this tone shift. Market analysts believe the notes will reveal that last month’s rate-setting meeting leaned dovish, adding further intrigue to the market's response.
Federal Reserve Chair Jerome Powell is scheduled to speak at the Jackson Hole Economic Policy Symposium on Friday morning, an event focused on the transmission mechanisms of monetary policy. Meanwhile, the CBOE Volatility Index (VIX) saw a notable rise, rebounding 14.1% to hit 16.90 during intraday trading.
This uptick followed a period of declining volatility after peaking at a record 65.7, coinciding with the S&P 500 ending an impressive eight-day winning streak. In the bond market, most Treasury yields experienced declines; the 10-year yield fell by 3.2 basis points to settle at 3.79%, while the two-year yield diminished to 3.93%, reflecting a decrease of 6.9 basis points. In broader economic news, mortgage applications saw a significant drop of over 10% for the week ending August 16, partially offsetting a prior spike of 17% the week before, even amid falling mortgage rates, according to data released by the Mortgage Bankers Association. In corporate developments, retail giant Target ($TGT) has notably lifted its full-year earnings outlook, citing positive trends in discretionary categories, with the retailer's fiscal second-quarter results surpassing market expectations.
This bullish outlook led to a remarkable 13% increase in shares during the session, making it the top performer on the S&P 500. Conversely, Franklin Resources ($BEN) saw its shares plummet 7.7% intraday, making it one of the poorer performers on the index, following news that co-Chief Investment Officer Ken Leech is taking an immediate leave of absence amid internal and external investigations related to prior trade allocations. In contrast, shares of Keysight Technologies ($KEYS) surged 13% intraday after the company reported fiscal Q3 results that exceeded market predictions for both earnings and sales, solidifying its position among the leading gainers on the S&P 500 during the session. In commodity markets, West Texas Intermediate crude oil prices dropped 1.7%, settling at $71.95 per barrel.
Meanwhile, gold prices experienced a slight dip of 0.1%, landing at $2,547.22 per ounce, while silver saw a marginal increase of less than 0.1%, edging up to $29.53..