The Dow Jones Industrial Average traded over 350 points lower after the Fed minutes were released at 2 p.m. ET. The major indexes did pare losses substantially into the close, but still ultimately closed lower.
At the close, the Dow Jones industrials were down around 0.4% after being down nearly 1% earlier. Tech stocks led the downside. The Nasdaq was down 2.2% at Wednesday's close.
The S&P 500 fell 1% while the Russell 2000 lost 1.3%. Volume was running higher on the Nasdaq and on the NYSE vs. the same time on Wednesday. The yield on the benchmark 10-year Treasury note rose to 2.6%. Meanwhile, West Texas Intermediate crude fell 4.7% to $97.11 a barrel.
Fed Minutes Reveal Rate Hike, Balance-Sheet Reduction
The newly released Fed minutes showed that officials discussed at their March meeting how they want to reduce their trillions in bond holdings, with a consensus amount of around $95 billion per month. Officials agreed that a limit of $60 billion in Treasuries and $35 billion in mortgage-backed securities would be reduced from the balance sheet and phased in over three months.
At the March meeting, the Fed approved its first interest-rate increase in more than three years.
U.S. Stock Market Today Overview |
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|---|---|---|---|---|
| Index | Symbol | Price | Gain/Loss | % Change |
| Dow Jones | (0DJIA) | 34497.23 | -143.95 | -0.42 |
| S&P 500 | (0S&P5) | 4481.26 | -43.86 | -0.97 |
| Nasdaq | (0NDQC ) | 13888.82 | -315.35 | -2.22 |
| Russell 2000 | 200.22 | -2.77 | -1.36 | |
| IBD 50 | 36.70 | -1.08 | -2.86 | |
Last Update: 4:16 PM ET 4/6/2022 |
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The first interest-rate increase of a quarter percentage point, or 25 basis points, lifted the benchmark short-term borrowing rate. The rate had been near zero since March 2020, at the start of the coronavirus pandemic.
"Many participants noted that — with inflation well above the committee's objective, inflationary risks to the upside, and the federal funds rate well below participants' estimates of its longer-run level — they would have preferred a 50-basis-point increase in the target range for the federal funds rate at this meeting," the minutes said. However, uncertainty over the war in Ukraine deterred some officials from going with the 50-point move.
Dow Jones Today
Among Dow Jones leaders, tech giants Microsoft and Salesforce.com dragged on the downside with losses of over 3.5% each. Salesforce.com fared the worst with its 4.4% loss. On the upside, health care stocks UnitedHealth and Amgen led with gains of over 2% each.
Microsoft, meanwhile, is near a test of its 50-day moving average, which is just below the 300 level. Meanwhile, fellow tech stock Apple lost over 1.8% on Wednesday. Apple stock has held up better than a lot of other tech stocks in the most recent pullback. Shares remain just 6% off highs and are testing support at the 21-day line. The 176.65 buy point is still in play.
The S&P 500 sectors traded mixed. On the downside, consumer discretionary and technology stocks lost 2% or more. Utilities, real estate and health care — all defensive categories — led the upside with gains of more than 1%.
The indexes have rallied considerably from their lows in early March, when the new uptrend began. However, after last week's pullback, indexes have continued lower this week. The Nasdaq, which never reclaimed its 200-day line, gapped down below its 21-day line on Wednesday and traded near session lows. Meanwhile, the S&P 500 also fell back below its 200-day and 21-day lines, while the Dow Jones is below both those averages and is testing support at its 50-day line.
Growth Stocks To Watch
Growth stocks were getting hammered, with the Innovator IBD 50 ETF showing losses of 2.7% on Wednesday, after falling more than 3% on Tuesday. The index broke below support at the 50-day line after finally reclaiming this area in mid-March.
Inside the MarketSmith Growth 250, coal stocks outperformed early but were off highs in afternoon trading. Arch Resources is testing support at its 10-week moving average. This is the first test of the line since its breakout.
Warrior Met Coal is also testing its 10-week line for the first time after a breakout. A bounce with conviction off the 10-week line would put both stocks in follow-on buy zones, up to 10% extended past their 10-week lines.
Follow Rachel Fox on Twitter at @IBD_RFox for more Dow Jones and stock market commentary.
