Stocks Waver Ahead of Fed Minutes

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The yield on the 10-year US Treasury extended a series of recent declines

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The Dow Jones Industrial Average fell 0.2%, or 59 points.

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Consumer-discretionary stocks propelled the S&P 500’s gains, up nearly 2.8% in afternoon trading. Several retail companies, including Nordstrom and Express, raised their 2022 forecasts, while others such as Dick’s Sporting Goods indicated that business was not getting worse. The bright outlook offered investors a welcome change from last week, when Target and Walmart reported disappointing results.

“Some investors were expecting retail Armageddon,” said Matt Perrone, director of research at Janus Henderson Investors. “The narrative was that it could be another grueling week. Now the market is rallying of relief around the consumer sector.”

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Stocks started the week poorly on concerns about the Fed’s tightening of monetary policy to counter the battle of high inflation and how sharp it might be due to a slowdown in growth. The S&P 500 is down nearly 18% from its previous record high in January and plunged into bear-market territory before losses last Friday.

“It has been really volatile, to say the least. It begs the question of whether a recession is coming or not. It should effectively push the market,” said Fahd Kamal, chief investment officer at Kleinwort Hambros. is dragging and pulling.”

Minutes of the Federal Reserve meeting earlier this month will be out at 2 p.m. ET and are expected to provide investors with more clues about policymakers’ outlook on the economy and inflation. US durable goods orders for April rose 0.4%, a slower pace than economists expected.

The stock has plummeted in 2022 as investors adjust to rising consumer prices and the Fed’s response. Sean O’Hara, president of Pacer ETF Distributors, said that as rates climb and the outlook for the economy turns bleak, shares of many companies are looking increasingly expensive, at least relative to their earnings.

“When one goes up,” said Mr. O’Hara, “the other has to go down.”

The yield on the benchmark 10-year Treasury note rose marginally to 2.760% from 2.758% on Tuesday. It has declined in four of the last five trading sessions. Yields fall when prices rise.

“The market is pricing the recession that will eventually come with the Fed’s stricture. It also predicts that inflation will slow to a much more reasonable level in 2023,” said Antonio Cavaro, head of investment at Generali Insurance Asset Management.

Government debt performs well in times of slow economic growth, which has led to stability in the bond market in recent times.

Oil prices were trading 0.6% higher at $111.40 a barrel with global benchmark Brent crude. The US Energy Secretary said the Biden administration did not rule out restrictions on oil exports to drive down domestic fuel prices, Reuters reported.

Grain prices continued to fall for a week from recent highs as rain conditions improved in the dry Great Plains and a Russian official said the country was open to easing a blockade of Ukrainian ports so that restrictions could be lifted. But food exports can be allowed. Soft-red winter wheat futures in Chicago fell 2% to $11.32 per bushel, while hard-red winter wheat, which is used for bread, was trading 1.6% lower at $12.18 per bushel. Maize and soybean futures also declined.

Among individual stocks, Snap shares rose 8.7%. The stock of the Snapchat maker fell 43% on Tuesday after it issued a profit warning, citing macroeconomic conditions, which have turned faster and worse than expected.

“Clearly there has been a re-evaluation of the technical assessment. It’s impossible to know how far this goes, but some of these are quality businesses and are significantly cheaper than what they’ve been trading recently,” Mr. Kamal said. “If you’re a long-term investor, it’s worth it.” Something interesting is about to happen.”

Retailer Nordstrom climbed 12% after raising its guidance for full-year revenue growth. Apparel company Express jumped 9.7% after posting a lower-than-expected loss and raising sales guidance. Dick grew 10%.

Home builder Toll Brothers rose 5.8% after reporting revenue and profit that beat analysts’ expectations.

The overseas, pan-continental Stokes Europe 600 gained 0.6%.

In Asia, key benchmarks were mixed. The Shanghai Composite Index rose 1.2% while Hong Kong’s Hang Seng was up 0.3%. Japan’s Nikkei 225 fell 0.3%.

—Ryan Decumber contributed to this article.

Write to Anna Hirtenstein at [email protected] and Justin Baer at [email protected]

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