THE GIST (“THE WHAT”)
The S&P 500 index extended losses for the second session in a row, registering a five-week low after hawkish FOMC meeting minutes showed that while policymakers are united in their resolve to bring inflation to their target annual rate of 2%, they remain divided on whether to pause rate hikes in September. The S&P 500 slipped as yields spiked following the minutes release, closing at day’s low at 4404.32, down 33.53 points (-0.76%).
Note: Our daily “S&P 500 Trading plan” will be posted around 9:30/10:00am EDT, every trading day.
Trading Plans for WED. 08/16: FOMC Meeting Minutes – Still Relevant to Push the Markets Up?
For the last published Results of the Morning Trading Plans, please click here
THE DETAILS (The “How & Why”):
The hawkish Fed’s July Federal Open Market Committee meeting minutes suggested that the members see significant risks of inflation spiking that could merit further rate hikes. The Fed officials also pledged that they would remain responsive to the incoming economic data. The 10-year T-note yield hit a nine-and-a-half month of 4.276%, settling 5.5 basis point higher at 4.266%. The U.S. 30-year mortgage rate hit its highest level since 2001 at 7.16%.
Chip stocks extended losses amid uncertainty about the outlook of interest rates, led by a 3.74% decline in Advanced Micro Devices. Marvell Technology, Analog Devices, and ON Semiconductor all shed more than 2%. Agilent Technologies fell 3.41% after the maker of laboratory instruments slashed guidance in the wake of China weakness.
Intel slipped 3.57% on agreeing to terminate its agreement to buy Tower Semiconductor for $5.4 billion. Tesla also extended losses, falling 3.16% after announcing price cuts of its Model S and Model X EVs in China. Bank stocks remained under pressure amid prospects of further downgraded and tougher oversight.
On earnings front, Jack Henry & Associates was the worst decliner of the session, tumbling 7% on weaker-than-expected earnings guidance. Resmed Inc and Monolithic Power Systems Inc were the other major decliners on disappointing earnings, falling 5% and 4.8%, respectively. On the bullish side, insurance stocks received a boost after Progressive Corp reported solid net premium numbers that rose 21% year-on-year. The insurance giant soared 8% to lead the gainers in today’s session.