Stocks market mixed after Fed minutes highlight taper talk

Stocks traded mixed on Thursday to steady following steep losses from a day earlier, driven by jitters over a potential shift in monetary policy that might remove some of the stimulus underpinning equity markets.

The S&P 500 turned slightly positive intraday after dropping earlier. The Nasdaq also shook off earlier losses, while the Dow remained in the red. Treasury yields retreated across the long end of the curve, and the benchmark 10-year yield sank back below 1.3%. 

Shares of Robinhood (HOOD) sank after the trading platform delivered its first earnings report since going public, with the print pointing to a revenue slowdown in the current period due to seasonal weakness in third-quarter trading. Chip-maker Nvidia (NVDA) gained nearly 6% after revenue and current-quarter guidance topped estimates. 

Equity markets have come under pressure on the back of the Federal Reserve’s July meeting minutes. These suggested central bankers were moving forward with their debate over the timing and scope of the tapering of their crisis-era asset purchase program, with most participants expecting the U.S. economy to make enough of a recovery to meet the “substantial further progress” necessary to trigger a slowdown in purchases by later this year. 

New data on the labor market on Thursday appeared to vindicate the Fed’s assessment of the recovery. Initial unemployment claims took a major step lower last week, falling to the lowest level since March 2020, and signaling another leap forward in improvements in the labor market. 

“With a growing number of officials now openly discussing the possibility of tapering beginning soon on the back of July’s strong employment report, it looks more likely than not that the wind-down will begin later this year, rather than early next year as we had previously thought,” Andrew Hunter, senior U.S. economist for Capital Economics, wrote in a note.

“Regardless, the minutes also made clear that an earlier taper does not necessarily mean that the Fed will bring forward plans to start raising interest rates, with many officials believing that the FOMC should ‘clearly reaffirm the absence of any mechanical link between the timing of tapering and that of an eventual increase in … the federal funds rate,'” he added.

Some pundits suggested the Federal Reserve’s escalating talk around tapering is at least partially by design.  

“The Fed is doing a masterful job of leading us down the taper exhaustion path, so when they actually do taper, we’ll be so exhausted talking about it, it won’t cause the volatility in the market,” Andrew Slimmon, managing director at Morgan Stanley investment management told Yahoo Finance. “That’s what I really think they’re doing: They’re going back and forth and back and forth. And at the end of the day, tapering just means they’re buying fewer bonds than they used to, but they’re still buying bonds.”

11:45 a.m. ET: FTC presses ahead with new antitrust complaint against Facebook 

The Federal Trade Commission pushed ahead with its court fight against Facebook, filing a new antitrust complaint against the social media giant on Thursday. 

The FTC also alleged in a previous complaint that Facebook has maintained an illegal monopoly. That complaint, however, was dismissed in June, though a U.S. district judge gave the FTC a second chance to file a complaint against the internet tech company. 

As with the previous complaint, the FTC cited Facebook’s acquisitions of other social media platforms including Instagram and WhatsApp as evidence of the company’s anticompetitive practices. Shares of Facebook were little changed to slightly higher Thursday afternoon. 

11:28 a.m. ET: Stocks cut earlier losses, S&P 500 and Nasdaq turn positive 

Stocks recovered losses from earlier in the session, with both the S&P 500 and Nasdaq turning slightly positive as technology stocks gained. The healthcare, consumer staples and information technology sectors outperformed in the S&P 500, while energy, materials and financials lagged.

The Dow held lower by 130 points, or 0.4%, as shares of Chevron, Boeing and Dow Inc. underperformed. Cisco led to the upside after posting better-than-expected quarterly earnings results, and UnitedHealth Group followed closely behind. 

10:13 a.m. ET: How the biggest concerns facing the market have evolved: Strategist 

The biggest concerns facing U.S. equity markets remain the trajectory of infections with the virus and the policy path forward for the Federal Reserve, many strategists have noted. These concerns, however, have been with markets for months, but have only recently begun to increase in their urgency, one strategist noted to Yahoo Finance. 

“I don’t think the concerns have changed considerably over the last number of months,” Alli McCartney, managing director at UBS, told Yahoo Finance on Thursday. “I think really what’s happened is the order of importance and information [has shifted].” 

“The question is whether the Delta variant continues to have additional curbs in mobility that affects the economics and spending of this country, and affects the pace at which emerging markets in Europe can continue to recover as well,” she added. 

“The Fed, again, that has been with us since the very beginning,” McCartney said. “How accommodative is our Federal Reserve going to be, what is fiscal policy in the U.S. going to look like, and is the rest of the world going to echo that? Definitely some concerns around that, although I would argue that those concerns have eased with the increased transparency that the Fed has been giving us, and with the path that looks like a December announcement of taper, which goes into the beginning of next year.” 

9:30 a.m. ET: Stocks open lower, heading for a third straight day of declines

Here’s where markets were trading just after the opening bell on Thursday:

  • S&P 500 (^GSPC): -27.82 (-0.63%) to 4,372.45
  • Dow (^DJI): -230.47 (-0.66%) to 34,730.22
  • Nasdaq (^IXIC): -87.5 (-0.66%) to 14,435.17
  • Crude (CL=F): -$1.71 (-2.61%) to $63.75 a barrel
  • Gold (GC=F): +$8.60 (+0.48%) to $1,793.00 per ounce
  • 10-year Treasury (^TNX): -2.8 bps to yield 1.245%

8:50 a.m. ET: Macy’s, Kohl’s deliver upbeat sales guidance, sending shares higher 

Retailers Macy’s (M) and Kohl’s (KSS) posted second-quarter earnings results and guidance that exceeded consensus estimates, suggesting a more robust return of in-person shopping than analysts were previously expecting. Shares of both companies jumped in early trading. 

Macy’s said it sees its current-quarter net sales coming in between $5.04 billion and $5.19 billion, exceeding Wall Street’s estimates for $4.76 billion, according to Bloomberg data. The rosy outlook added to optimism around stronger-than-expected second-quarter results: Adjusted earnings of $1.29 per share were well above the 20 cents expected. Revenue of $5.65 billion grew 59% over last year and also exceeded estimates. 

Kohl’s posted adjusted earnings of $2.48 per share on revenue of $4.22 billion for the second quarter, topping estimates on both measures. Sales were up 31% compared to the year-ago period. The company added it now sees full-year sales increasing in the low-twenties percentage range, with this outlook a step above its previous guidance for mid-to-high teens percentage range increases for the year. 

8:35 a.m. ET: Jobless claims dip to fresh pandemic-era low as labor market recovery picks up steam

Weekly new unemployment claims dropped to the lowest level since March 2020 last week, improving more than expected. 

New filings came in at 348,000 for the week ended August 14, the Labor Department said Thursday. This took out the previous pandemic-era low of 368,000, and dropped from the prior week’s 377,000 new claims. Continuing claims across state programs were 2.82 million for the week ended August 7, also marking the lowest level since March 2020.

The total number of claimants across all programs also moved lower, with more individuals rolling off both state and federal enhanced unemployment benefits. For the week ended July 31, about 11.7 million Americans were claiming benefits across all programs, marking a drop of about 311,000 from the prior week. 

7:14 a.m. ET Thursday: Stock futures extend declines, Dow futures drop nearly 300 points

Here’s where markets were trading ahead of the opening bell Thursday morning:

  • S&P 500 (^GSPC): -32.25 (-0.73%) to 4,362.25
  • Dow (^DJI): -285.00 (-0.82%) to 34,602.00
  • Nasdaq (^IXIC): -84.25 (-0.57%) to 14,765.00
  • Crude (CL=F): -$2.47 (-3.77%) to $62.99 a barrel
  • Gold (GC=F): +$7.60 (+0.43%) to $1,792.00 per ounce
  • 10-year Treasury (^TNX): -4.5 bps to yield 1.228% 

6:15 p.m. ET Wednesday: Stock futures open lower

Here’s where markets were trading Wednesday evening: 

  • S&P 500 futures (ES=F): -3 points (-0.07%) at 4,391.50
  • Dow futures (YM=F): -24 points (-0.07%) to 35,863.00
  • Nasdaq futures (NQ=F): -1.5 points (-0.01%) to 14,847.75

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