In a notable trading day, the US benchmark equity indexes exhibited signs of growth as investors eagerly awaited the release of the minutes from the Federal Reserve's July monetary policy meeting. As midday approached on Wednesday, the S&P 500 and the Nasdaq Composite both saw an increase of 0.3%, reaching 5,612.9 and 17,869.8, respectively.
Meanwhile, the Dow Jones Industrial Average also experienced a slight uptick, with a 0.1% gain bringing it to 40,879.9. Among the various sectors, consumer discretionary led the charge in gains, while financials and communication services found themselves on the losing end. The critical minutes of the Federal Reserve’s July meeting are set to be disclosed at 2 PM ET.
During the last committee meeting, the Federal Open Market Committee (FOMC) made the decision to maintain its benchmark lending rate in the range of 5.25% to 5.50%, marking the eighth consecutive pause in rate hikes. The committee's commentary highlighted that inflation continues to be "somewhat elevated," although it has shown signs of easing over the past year. Since the FOMC initiated an increase in interest rates back in March 2022 to combat inflation, the last such increase occurred in July 2023.
This strategic move has undoubtedly influenced the economic landscape, particularly in terms of employment and job growth. According to preliminary revisions released by the Bureau of Labor Statistics, the US economy reportedly created 818,000 fewer jobs in the year leading up to March than originally estimated. Market analysts are cautious, with ING reporting, "Given that everything was weak in the latest July jobs report -- weak payrolls, rising unemployment, falling hours worked, and cooling wages -- today's update will only put more pressure on the Fed to loosen monetary policy." This sentiment underscores the growing concern over economic momentum, which seems to be diminishing from a weaker position than previously understood. As markets anticipate further guidance, all eyes will be on Fed Chair Jerome Powell's comments scheduled for Friday at the highly-regarded annual economic symposium in Jackson Hole, Wyoming.
Investors are keen for insights on potential monetary easing that could stem from the current economic data. In commodities, West Texas Intermediate crude oil saw a decline of 1.7%, dropping to $71.92 per barrel as intraday trading progressed. Turning to individual company performances, Keysight Technologies ($KEYS) emerged as a standout performer on the S&P 500, with shares jumping nearly 13%.
The electronics test and measurement equipment manufacturer reported fiscal third-quarter results that exceeded expectations, with Chief Executive Satish Dhanasekaran projecting that second-half orders would surpass those of the previous six-month period. Target ($TGT) was not far behind, following closely on the S&P 500 with a 12% increase intraday Wednesday, as the retailer raised its full-year earnings outlook amid improving trends across its discretionary categories.
Their fiscal second-quarter results surpassed market expectations, reflecting a positive trajectory. Conversely, American Express ($AXP) shares fell by 3.3%, marking the steepest decline on the Dow and ranking among the worst performers on the S&P 500. Analyst assessments from BofA led to a downgrade of the stock to neutral from buy, stating it anticipates "limited incremental upside given potential for subdued billings volume growth and current premium valuation." In a busy earnings week, companies such as Synopsys ($SNPS), Snowflake ($SNOW), Zoom Video Communications ($ZM), and Urban Outfitters ($URBN) are all slated to provide their quarterly results after the closing bell on Wednesday. In the precious metals market, gold experienced a minor downturn of 0.1%, settling at $2,547.40 per troy ounce, while silver saw a modest gain of 0.1%, rising to $29.55 per ounce.
The fluctuations in both equity and commodities markets highlight the dynamic nature of the current economic landscape, shaped significantly by the decisions and outlooks of policymakers and market leaders alike..