Investors were waiting for the publication of the minutes of the last meeting of the Fed. In fact, the Nasdaq lost almost 3% during the day before recovering a little ground at the close.
Among the day’s stocks, low-cost airline Spirit, which JetBlue and Frontier compete with, lost 2.4% to $26.27 a share after gaining more than 20% on Tuesday. JetBlue, which offered $3.6 billion to buy out its competitor, lost 8.7%, while Frontier lost 11%.
Technology stocks, very sensitive to rate hikes, made water: Apple (-1.8%), Amazon (-3.2%), Tesla (-4.2%) or Meta (Facebook -3.7% ) ended in red. Semiconductor makers also fell, with Nvidia losing 5.9% and AMD 3%.
Several members of the Federal Reserve are in favor of more significant interest rate hikes in the coming months to combat strong inflation, according to extracts from the minutes of the last meeting of the central bank’s monetary committee on March 15-16.
“Many participants (of the meeting) highlighted that one or several hikes of 50 basis points (half a percentage point, ndlr) could be appropriate in future meetings, particularly if inflationary pressures remain high or intensify”the document stated.
The Fed raised its rates by 0.25 percentage point in March after two years at virtually zero, amid “uncertainties” over the war in Ukraine. Rates are now between 0.25% and 0.50%.
But it might be “appropriate” to return “quickly” to “neutral” rates of around 2-2.50%, according to committee members.
To curb inflation, the Fed is also counting on easing off billions of dollars in Treasuries and other assets it has bought since March 2020 to inject liquidity into the economy. This will happen from “a next meeting, perhaps from the month of May,” the minutes indicate.
For Sam Stovall, CFRA strategist, “this approach is not stricter than expected.” Benchmark 30-year mortgage rates for the US market topped 5% for the first time in more than 10 years on Wednesday, and home loan orders fell for the fourth week in a row, according to the Mortgage Bankers Association.
Source: Ambito
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