U.S. stocks remained lower on Wednesday, as the Dow Jones Industrial Average fell 284.85 points, or 0.76 percent, to 37,430.19. The S&P 500 sank 38.02 points, or 0.80 percent, to 4,704.81. The Nasdaq Composite Index shed 173.73 points, or 1.18 percent, to 14,592.21.
Eight of the 11 primary S&P 500 sectors ended in red, with real estate and consumer discretionary leading the laggards by losing 2.35 percent and 1.88 percent, respectively. Meanwhile, energy and utilities led the gainers by adding 1.52 percent and 0.39 percent, respectively.
According to the minutes from the Fed meeting released Wednesday, several Federal Open Market Committee (FOMC) members said it might be necessary to keep the funds rate at an elevated level if inflation doesn't cooperate, and others noted the potential for additional hikes depending on how conditions evolve.
"Participants generally stressed the importance of maintaining a careful and data-dependent approach to making monetary policy decisions and reaffirmed that it would be appropriate for policy to remain at a restrictive stance for some time until inflation was clearly moving down sustainably toward the Committee's objective," the minutes stated.
Earlier Wednesday, Richmond Fed President Thomas Barkin expressed caution about policy, noting the number of risks inherent in trying to guide the economy to a soft landing.
Despite the cautionary tone from Fed officials, markets still expect the central bank to cut aggressively in 2024. The message from the Fed's December meeting is that policy makers "are behind the curve on how quickly inflation has fallen," said Luke Tilley, chief economist of Delaware-based Wilmington Trust, which has roughly 80 billion dollars in assets under management. "While the minutes are a good reflection of Fed officials being cautious, we would expect them to cut more than three times as more inflation data comes in low."
U.S. labor market cooled further in November as job openings slipped to a 32-month low of 8.8 million, according to the Bureau of Labor Statistics' JOLTS report issued on Wednesday. This marks a slight decline from the revised 8.9 million openings in October and suggests a potential slowdown in the previously robust hiring pace.
Meanwhile, the U.S. manufacturing sector shrank for the 14th straight month in December, according to the Institute for Supply Management (ISM) on Wednesday. The ISM manufacturing purchasing managers' index (PMI) increased to 47.4 percent in December, up from the 46.7 percent recorded in November.
Tim Fiore, chair of the ISM manufacturing survey committee, said the sector was closing the year in a "really good position" and forecast that the ISM factory index would rise above the 50-percentage-point threshold by March.
"The focus in 2024 shifts from 2023's recession and inflation tail risks to degrees of normalization in growth, policy and cross-asset relationships," said Stuart Kaiser, head of equity trading strategy at Citigroup Global Markets, in his team's first client report of the new year.
Latest comments