US: Stocks dip as Fed minutes suggest more rate hikes ahead

WALL Street stocks dipped Wednesday (Jul 5) as US Treasury bond yields pushed higher and minutes from the Federal Reserve’s June meeting signalled the possibility of more interest rate hikes ahead.

While the Fed voted last month to pause rate increases after 10 consecutive hikes, the Fed meeting minutes showed that policymakers believe two likely hikes will be needed in 2023 to bring inflation back down.

“Almost all officials expected additional rate hikes this year,” said a note from Oxford Economics. “The hawkish wing of the Fed is making the most noise, suggesting that the Fed isn’t done tightening monetary policy.”

The Dow Jones Industrial Average dropped 0.4 per cent to 34,288.64.

The broad-based S&P 500 fell 0.2 per cent at 4,446.82, while the tech-rich Nasdaq Composite Index also declined 0.3 per cent to 13,791.65.

After a strong second quarter, stocks have been choppy thus far at the start of July.

Major indices were in the red most of the day as bond yields climbed, suggesting investors expect more interest rate increases.

General Motors climbed 1.2 per cent after reporting a 19 per cent jump in second-quarter US car deliveries amid continued strong consumer demand and improved car inventories.

Facebook parent Meta Platforms rose 2.9 per cent as it prepared to launch Threads, a new app that has been described as a competing service to Twitter.

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UPS fell 2.0 per cent after labour negotiations with the Teamsters broke down, raising the possibility of a strike next month.

UPS called for the union, which has been organising rallies with workers demanding better pay and benefits, to “return to the table to finalise this deal”.

Leading semiconductor shares were under pressure, including Advanced Micro Devices, Micron Technology and Intel. All fell 1.6 per cent or more. AFP