Stocks gained on Wednesday as investors digested the minutes from the Federal Reserve’s latest meeting, which found the central bank debating the unwinding of their massive balance sheet.
The S&P 500 increased 0.2%, while the Dow edged very slightly higher and the Nasdaq surged 0.8%. The Nasdaq, heavily weighted toward mega-cap tech stocks, has been a lightning rod for volatility in recent weeks, and Wednesday’s trading was another example of that.
First up, the scoreboard:
- Dow: 21,479.65, +0.38, (0.00%)
- S&P 500: 2,433.21, +4.02, (+0.16%)
- Nasdaq: 6,152.66, +42.33, (+0.69%)
- US 10-year yield: 2.334%, -0.012
- WTI crude oil: $US45.07, -2.00, -4.25%
1. The Fed is divided over when to start unwinding its massive balance sheet. The central bank said in June that it planned to gradually allow a fixed amount of its assets to roll off without reinvestment, and raise the caps on these amounts every three months.
2. Wall Street is at war with traders over the future of bank stocks. While the group has been on a tear since the election, and boasts strong future prospects, analysts have been stingy in terms of rewarding single stocks with buy ratings.
3. One of the market’s hottest trades just had its biggest day yet. An inverse VIX ETN saw record trading volume of $US3.3 billion on Thursday, June 22. The product also saw its biggest single-day activity relative to a long-VIX instrument.
4. GOLDMAN SACHS: It looks like demand for Teslas has peaked. The firm was speaking specifically about the company’s Model S sedan and Model X SUV. As such, Goldman downgraded its rating on Tesla.
5. The Fed is losing confidence in a key part of its policy. Minutes from last month’s meeting showed a growing number of policymakers are becoming reluctant about the need for continued monetary tightening given weaker US economic data.