Stock-market rally vaporizes as 10-year yield climbs to 2.95%, dollar strengthens

Wed, 21 Feb 2018 22:22:05 GMT


A rally for the Dow Jones Industrial Average withered on Wednesday as Wall Street struggled to interpret minutes from the Federal Reserve's January meeting. The Dow closed down 166.97 points, or 0.7%, at 24,797.78, eroding what had been a more than 300-point rally in blue chips in the immediate wake of the release of minutes at 2 p.m. Eastern Time. However, those gains gave way to losses with about an hour left in trade on the day. The S&P 500 index sank by 14.93 points, or 0.6%, to 2,701.33, but had been up by 1.2% or 32 points earlier in the day, while the Nasdaq Composite Index shed 0.2% to end at 7,218.23. A deflation of the brisker buying sentiment in stocks was attributed partly to a climb in yields for the 10-year Treasury note to a session high, and a four-year peak, at 2.95%, follows meeting minutes from the late-January gathering of the Federal Open Market Committee, which reinforced expectations that a rate increase next month is likely. A popular dollar gauge, as measured by the ICE U.S. Dollar Index , also picked up steam up 0.4% at 90.12. Minutes from the Jan. 30-31 FOMC meeting showed that officials saw a stronger economy than at the end of 2017. The strengthening "increased the likelihood that a gradual upward trajectory of the federal funds rate would be appropriate." To convey this message, officials altered their statement to point to "further gradual increases," according to the minutes. However, the Fed's minutes don't incorporate recent signs of rapidly rising inflation, including the jobs report and a recent reading of consumer prices, which both showed inflation is running hot.

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