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US close: Stocks hold losses following FOMC minutes

By Iain Gilbert

Date: Wednesday 22 May 2019

US close: Stocks hold losses following FOMC minutes

(Sharecast News) - US stocks closed lower on Wednesday, as the US' intensifying trade war with China overshadowed minutes from the Federal Reserve's policy meeting.
At the close, the Dow Jones Industrial Average was 0.39% lower at 25,776.61, while the S&P 500 was 0.28% weaker at 2,856.27 and the Nasdaq was 0.45% softer at 7,750.84.

The Dow closed 100 points lower on Wednesday after Washington's decision to temporarily curb some sanctions against Chinese telecoms giant Huawei had provided some relief and boosted stocks in the previous session.

On Tuesday, tech shares managed to recoup some of their losses from the prior session, but the positive sentiment failed to make its way across to Asian markets overnight, which were little changed.

China's ambassador to the US said on Tuesday that Beijing was open to the idea of continuing trade talks, stating that it was Washington that was being indecisive.

Some investors were holding out hope that a US-China trade deal can still be achieved, most likely at this year's G20 summit at the end of June.

In corporate news, retailer Lowe's tumbled 11.85% after cutting its full-year guidance on the back of weak first-quarter earnings, while Target darted 7.78% higher as Q1 same-store and e-commerce sales topped expectations.

Avon Products closed 9.06% higher following reports that it was on the brink of acquiring iconic Brazilian makeup company Nature Cosmetics.

Carmaker Tesla ended the session 6.02%, recording a sixth straight day of declines after analysts at Citigroup issued an updated bear case on the group.

On the data front, Fed officials decided to maintain their patient approach to interest-rate changes "for some time" at their last meeting, with many members siding with chairman Jerome Powell's view that the recent dip in inflation was probably temporary.

"Members observed that a patient approach to determining future adjustments to the target range for the federal funds rate would likely remain appropriate for some time," according to minutes of the Federal Open Market Committee's two-day meeting in late April.

The FOMC left its benchmark policy rate unchanged at 2.25% to 2.5% and reiterated its pledge to be "patient" in weighing future moves.

However, Fed members were split as to whether or not higher rates would be necessary if the economy was to continue evolving along its predicted path, with some members arguing that higher productivity could indicate more economic softness than the low unemployment rate suggests.

While in Hong Kong overnight, St Louis Fed president James Bullard said the FOMC may need to lower its short-term interest-rate target if inflation did not appear on track to rise back to desired levels at 2%.

Elsewhere, mortgage applications increased 2.4% week-on-week, according to the Mortgage Bankers Association.


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