U.S. Stocks Sharply Fell Following Fed Minutes’ Released

On Wednesday, May 20, U.S. stocks sharply fell as Wall Street’s major indices closed lower following the Federal Reserve’s April minutes release.

The meeting showed that members agreed that the economy of the United States would remain far from the goals of its central bank, while others are discussing the tapering bond-buying program.

In morning trading, Dow Jones Industrial Average slipped as much as 164.42 points or 0.5%, to 33,896.04 while S&P 500 shrunk 12.15 points or 0.3% to 4,115.68. 

In addition, Nasdaq Composite crashed 3.90 points or not as much as 0.1% to 13,299.74.  

Investors are still agonizing over the rapid pace of inflation that gave rise to the U.S. Federal Reserve to taper its bond purchases as well to increase its interest rate.

Even though Fed officials already indicated that the economy is still in its recovery phase and it still demands stimulus from the central bank, analysts state that the reserve bank system is closely monitoring economic development.

Analysts also added on their forecasts that the federal reserve bank is ready to regulate its policies when needed.

Despite the Fed officials’ statements and reassurances that the increase in prices will only remain temporary, investors still jitters about the strong inflation data and an indication of a worker scarcity in recent weeks.

A pick-up in inflation worries traders a lot as it could compress margins and corrode corporate profits. If the price pressures continue to soar higher for a long period of time, the Fed will be forced to secure its monetary policy.

Treasury Yields Smashes

On the other hand, treasury yields jumped as tech shares led the decline on Wednesday. 

As the major U.S. indices are under pressure this week, it is the same with tech shares not just for the recent weeks but for this month too.

Shares of tech giants Microsoft, Netflix, Amazon, and Apple all crashed more than 2%, while Tesla also tumbled over 4%. Same with Alphabet which slid more than 3%.

As bond yield moves inversely to prices, it rose to succeed the release of the Fed’s last policy meeting where officials gave clues in reconsidering their easy monetary policy.

At around 4:00 p.m ET, four basis points were increased on the U.S. 10-year Treasury note to 1.678% while the yield on the benchmark U.S. 30-year Treasury bond smashed two basis points to 2.38%.

Meanwhile, Germany’s 10-year Treasury yield stepped up one basis point to -0.10% while Britain’s 10-year year moved down a little at 0.86%.