Dow Jones effect by the latest FOMC meeting minutes revealed that the bond purchasing program would be tightened this year. The Dow Jones dropped by 382.9 points, more than 1%, to 34,960 as significant stock indices slipped in reaction to the news.
The S&P 500 also dropped by almost 1.1%, and the Nasdaq was down by 0.9% to 14,525.
The committee noted that the economy would grow as much as expected, and it would be suitable to reduce their bond-buying rate this year.
The inflation target was satisfactory, and they were happy with the growth of the employment rate.
However, not all committee members agreed with this timeline as some would prefer the Fed start tapering from early 2022.
The growing support from committee officials is supported by the solid jobs data of the last two months and the increasing inflation rate.
The plan is to announce in September and start as early as October. And other members within the central bank are beginning to support this notion. But if the August job numbers are weaker, the Fed could delay the ultimate decision to the November meeting. By then, they would have a better insight into delta virus spreading and the increased inflation rate.
Fed tapering plans are not the only concern.
Besides the Fed’s plans to start tapering, other indicators are lingering on investor’s minds. Recent housing starts data showed a 7% drop to 1.534 million units, far below the standard units in July.
Major retailer earnings reports were in focus as well. Lowe’s previous quarter earnings surpassed expectations as sales increased, shares jumped by 9.5%.
TJ Maxx shares increased by 5.6% as quarterly earnings were better-than-expected. Target also posted good quarter two results. However, stocks dropped by 2.8%. Back-to-school spending increased as their revenue and profit met expectations.
According to the Chief investment officer for Independent Advisor Alliance, the delta variant concern will be a constant focus but feels that the growing economy and robust job market will give the confidence to drive the market to new highs again.