US equities retreat ahead of Fed minutes

Prior to the release of the Federal Reserve’s minutes from its June meeting, Wall Street’s major indexes declined on Wednesday as dismal economic data from the US and China as well as escalating Sino-US tensions dampened market mood. According to a Commerce Department study, US industrial orders for May 2023 increased less than anticipated, fueling concerns about a slowdown brought on by high loan rates after data released on Monday indicated that manufacturing continued to decline last month.

Investors are looking for hints on the direction of monetary policy from the Fed minutes, which are scheduled for release at roughly 2:00 PM ET. Later this week, the government will report more economic data, including the non-farm payrolls, which might influence the Fed’s rate path.

According to CME’s Fedwatch tool, the odds for a 25-basis-point rate increase in July were 88.7%, but traders have only put in a 17.7% possibility that the central bank will deliver another raise in September.

The Federal Open Market Committee’s more dovish and more hawkish factions are engaged in a bit of a tug of war within the Fed, according to Fed Chair Jerome Powell. Chip stocks Intel and Micron Technology fell 2% each after China said it would control exports of some metals widely used in the semiconductor industry as tensions between Beijing and Washington rise over access to high-tech microchips. The Philadelphia SE Semiconductor Index lost 1.4%.

After a sharp AI-fueled rally in the first half of the year, Wall Street kicked off the new quarter with slim gains in a holiday-shortened session on Monday, led by Tesla after the electric-vehicle company posted record second-quarter deliveries.

The Dow Jones Industrial Average was down 56.47 points, or 0.16%, at 34,362.00, the S&P 500 (.SPX) was down 2.44 points, or 0.05%, at 4,453.15, and the Nasdaq Composite was down 9.20 points, or 0.07%, at 13,807.58.

Eight of the 11 major S&P 500 sectors declined by mid-day. Material shares led losses, down 2.0%. Meta Platforms rose 3.4%, outpacing its Megacap tech and growth peers, ahead of the expected release of its Twitter-rival app, Threads, on Thursday.

The possibility that Meta truly has a Twitter-Killer ready to go live on the app store has investors more than a little thrilled. After the Teamsters Union and the postal service operator accused one another of abandoning contract negotiations, United Parcel Service’s stock fell 1.5%.

Following the signing of a contract to explore potential for the development and production of mRNA medications in China, Moderna saw a 3% increase in value. After the automaker announced positive second-quarter U.S. auto sales, supported by easing supply chain challenges, General Motors gained 1.1%. On the NYSE and the Nasdaq, declining issues outnumbered advancers by a ratio of 1.64 to 1 and 1.74 to 1, respectively.