Dow Jones Industrial Average falls on Wednesday after Fed Minutes reveal cautious FOMC
NEW YORK (May 22) The Dow Jones Industrial Average (DJIA) slipped back during US market session on Wednesday as investors continue to get pushed back on broad rate cut expectations. A recent decline in US Consumer Price Index (CPI) inflation helped to bolster traders’ confidence in a September rate trim from the Federal Reserve (Fed). However, still-high inflation numbers well above the Fed’s 2% target range and a cautionary warning from Fitch Ratings that global services inflation is likely to remain higher for longer are battering investors’ rate cut dreams.
Read more: Fed Minutes leave the door open to a probable rate cut in September
Fitch Ratings announced on Wednesday that global services inflation will likely remain higher for longer than originally anticipated, meaning interest rates are unlikely to recede nearly as quickly as investors have hoped through all of 2024. According to the CME’s FedWatch Tool, rate markets are pricing in only 60% odds of a quarter-point rate cut from the Federal Open Market Committee (FOMC) in September, tumbling from 70% in a matter of days. In December, rate traders were pricing in better-than-even odds of six rate cuts in 2024 from the FOMC beginning in March. Fast forward to today, and investors are seeing the door slowly close on two rate cuts for the year beginning in September.
The FOMC’s latest Meeting Minutes published on Wednesday, and while the FOMC didn't completely rule out September rate cut, odds are looking slimmer as Fed policymakers reiterated the need to wait for stronger evidence that inflation would continue easing to the US central bank's 2% target.
Dow Jones news
The Dow Jones traded mostly flat on Wednesday in the run-up to FOMC Meetings Minutes. Post-FOMC release, the Dow Jones shed around one half of one percent, backsliding around 200 points as investors balk at a Fed less willing to engage in rate cuts as investors continue to hope for.
Dow Inc. (DOW) fell -2.22% on Wednesday, trading below $57.60 and extending a backslide from a 52-week high set only a week ago. On the high side, Johnson & Johnson (JNJ) climbed 1.49% to $153.50 per share after reporting Q1 net profit of $3.26 billion. JNJ had posted a net loss of $68 million the previous quarter.
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