US Stocks Hold Gains After Fed Minutes, Bonds Steady, Dollar Firm

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FILE PHOTO: A broker is pictured near a computer screen showing movements in the stock market since the morning opening at the Colombo Stock Exchange February 6, 2014. REUTERS/Dinuka Liyanawatte/File Photo

NEW YORK ⸺ U.S. Treasuries prices held gains, keeping yields lower and stock prices stayed mostly higher with the dollar firm on Wednesday, after the Federal Reserve released minutes from its latest meeting that largely confirmed market expectations.

At a mid-June meeting, Fed officials said substantial further progress on economic recovery “was generally seen as not having yet been met,” though participants expected progress to continue, according to the minutes. 

“Various participants” at the session still felt conditions for curbing the bond-buying that is supplying markets with cash would be “met somewhat earlier than they had anticipated,” while others saw a less clear signal from incoming data, said the minutes.

“It looks like they’re setting the market up for an announcement on cutting back from this bond buying sometime toward the end of the third quarter or early fourth quarter,” said Andrew Richman, senior fixed income strategist at Sterling Capital Management in Jupiter, Florida.

Stock prices and bond yields had wobbled earlier, reflecting fears that the U.S. economic recovery may be slowing, and of the spread of COVID-19 variants. Those factors clouded the view that rates may rise soon to curb inflation, though many investors believe current inflation signs are temporary.

Bond prices rose during the session, pushing yields lower. At 2:50 p.m. EDT (1850 GMT), the yield on 10-year Treasury notes was down 4.7 basis points to 1.323%. During the session the yield dipped as low as 1.2960%.

U.S. stock prices bounced off session lows to post slight gains for the day. 

The Dow Jones Industrial Average rose 63.54 points, or 0.18 percent, to 34,640.91, while the broad S&P 500 gained 9.16 points, or 0.21 percent, to 4,352.7. 

The tech-heavy Nasdaq Composite was down 16.58 points, or 0.11 percent, to 14,647.06.

“There’s a sense with recent economic data that even if there are some Fed members likely to look towards tapering (asset purchases), the overall policy will stay very loose and uninterrupted because we are not seeing anything indicative of ‘too hot’,” said Juan Perez, senior FX strategist at Tempus Inc in Washington. 

The dollar index, which tracks the greenback versus a basket of six currencies, rose 0.082 points or 0.09 percent, to 92.628. 

Oil prices continued their recent decline. Brent crude was last down $1.23, or down 1.65 percent, at $73.3 a barrel. U.S. crude was last down $1.32, or down 1.8 percent, at $72.05 per barrel.

Gold extended gains to a sixth session, helped by the lower Treasury yields. Spot gold prices rose $6.5627 or 0.37 percent, to $1,803.25 an ounce.[GOL/]

Reporting by Alwyn Scott; Additional reporting by Carolyn Cohn in London and Wayne Cole in Sydney; Editing by Peter Graff, Kirsten Donovan, and David Gregorio; Reuters

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