The Fed had last signalled its belief that risks were balanced in December, when it hiked rates for the first time in almost a decade, raising them from record lows near zero to between 0.25 per cent and 0.5 per cent. Health care companies also fell.
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On Thursday, one of the most dovish members of the Federal Reserve s policy board, William Dudley, expressed confidence in the economy and reiterated that a rate increase will be on the table in the June 14-15 meeting.
Six of the S&P 500’s sectors fell on Thursday, led by a 0.95 per cent loss in industrials.
Release Wednesday of the FOMC’s April meeting minutes prompted financial markets to price in a greater chance that the central bank would make its next move sooner rather than later.
The minutes said some Fed officials did express concerns at the April meeting that the economic data might not be clear enough by mid-June to determine whether a rate hike was warranted.
“This is all about the Fed”, said Bill Strazzullo, chief market strategist at Bell Curve Trading. Wholesale gasoline fell 2 cents to $1.63 a gallon, heating slipped less than a penny to $1.48 a gallon and natural gas rose 4 cents to $2.04 per 1,000 cubic feet. Those stocks have outperformed the market this year due to their reliable dividends, but higher rates on bonds would diminish the appeal of those stocks to investors seeking income. “Negative yields and the prospect of higher inflation will continue to provide support”.
RETAIL ROCKET: Wal-Mart Stores jumped 8 percent after reporting surprisingly strong sales and releasing an optimistic outlook. The stock of the world’s largest retailer rose $5.77 to $68.91. That comes in contrast to dour forecasts and results from many other retailers in recent weeks.
Agricultural giant Monsanto Co. jumped 3.5% as chemicals company Bayer AG confirmed it had approached Monsanto about a takeover.
The most active gold contract for June delivery fell 19.60 USA dollars, or 1.54 percent, to settle at 1,254.80 dollars per ounce.
The Stoxx Europe 600 index dropped 1.1 percent, with BHP Billiton Ltd. and Rio Tinto Group leading miners lower as commodities retreated. In our view, an extension of those trends would likely keep the S&P 500 Index range-bound and below 2,080 resistance over the near term. Hong Kong’s Hang Seng added 0.9%, on track for a rise of 0.5% for the week.
The pound gained 0.2 percent to 76.69 pence per euro, after touching the strongest level since February 4 earlier and climbing 1.8 percent on Wednesday. Benchmarks in Taiwan, New Zealand and Southeast Asia also lost ground.
ENERGY: Benchmark U.S. crude oil fell $1.24 to $46.92 a barrel in NY.
U.S. crude fell 2.7 per cent to $46.91 a barrel, while benchmark Brent dropped 2.8 per cent to $47.54 a barrel.
The U.S. central bank noted that although the growth in economic activity appeared to have slowed, labor market conditions improved further.
Basic resources – which were hit hard on Thursday as the dollar rose on Fed rate-hike expectations – were among the best performers as the USA currency eased back.
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In other precious metals, silver rose $0.01 at $16.51/$16.53. Benchmark Brent’s front-month contract, July, settled down 12 cents at $48.81 a barrel.
