(Bloomberg) — Stocks slid as the Federal Reserve signaled that a decision to reduce its bond-buying program could happen in 2021. Treasuries and the dollar were little changed.
The S&P 500 extended losses into a second day after minutes of the Federal Open Market Committee’s July gathering said most officials agreed last month they could start slowing the pace of asset purchases later this year. While the record shows they don’t yet have agreement on the timing or speed of tapering, most had reached consensus on keeping the composition of any reduction in Treasury and mortgage-backed securities purchases proportional.
“The minutes reflect a Fed that is prepared to accelerate its taper timeline to perhaps the next few months,” said Sean Bandazian, an investment analyst at Cornerstone Wealth. “There is still reason to believe we will see volatility throughout areas of the market with high sensitivity to interest rates.”
Fed Chair Jerome Powell will have an opportunity to delve into the policy and economic outlook during next week’s Jackson Hole symposium — the central bank’s most prominent annual conference.
“Fed tapering is clearly in training camp mode, with Jackson Hole likely being a preseason game, and either the September or most likely the November FOMC meeting being the time to announce how they will pull back stimulus,” wrote Edward Moya, senior market analyst at Oanda.“It’s clear from the minutes that the Fed isn’t ready to start tapering yet. Still, they are leaning towards announcing by the end of the year at the latest,” said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance.“While the Fed minutes reveal more conviction in terms of starting to taper this year, they made the bold point that there’s no connection between tapering and rate hikes,” wrote Mike Loewengart, managing director of investment strategy at E*Trade Financial.
Read: CME Denies It’s in Talks for $16 Billion Takeover of Cboe Here are some events to watch this week: Bank Indonesia rate decision and Governor Perry Warjiyo briefing ThursdayU.S. initial jobless claims, leading index Thursday Some of the main moves in markets:
The S&P 500 fell 1.1% as of 4 p.m. New York timeThe Nasdaq 100 fell 1%The Dow Jones Industrial Average fell 1.1%The MSCI World index fell 0.6%
The Bloomberg Dollar Spot Index was petite changedThe euro was unchanged at $1.1710The British pound rose 0.1% to $1.3756The Japanese yen fell 0.2% to 109.80 per dollar.