https://finance.yahoo.com/news/stock-market-news-august-21-2019-122752465.html
U.S. stocks rose Wednesday, with the Dow holding onto gains of more than 200 points into market close as investors considered positive earnings results from Target and Lowe’s and digested the release of minutes from the Federal Reserve’s July meeting.
The Fed’s July meeting minutes revealed that most Fed officials viewed July’s rate cut as a mid-cycle adjustment. This reinforced Fed Chairman Jerome Powell’s message during his post-meeting press conference last month asserting the rate cut was not the beginning of a long-term easing campaign.
However, “a couple of participants indicated that they would have preferred a 50 basis point cut,” the minutes said, with these members considering low inflation signals as justification for a deeper reduction to benchmark rates.
With all of the current risks weighing on the U.S. economy, Fed officials stressed the need for policy flexibility. At the close of the July meeting, the Fed cut rates for the first time since 2008, and markets have since priced in between 50 and 75 basis points worth of further cuts by the end of 2019.
However, two Federal Open Market Committee (FOMC) members had dissented from the Fed’s latest monetary policy decision, with each instead arguing that the economy did not need a rate cut in July. This had left market participants jittery over whether the FOMC would be willing to reduce rates further going forward, especially in the face of recent economic data underscoring robust consumer spending and a tight labor market.
Commentary from Fed Chair Jerome Powell on Friday during the central bank’s annual Jackson Hole symposium will also be closely monitored for signals for the path forward in monetary policy, giving the Fed another opportunity to streamline its messaging ahead of the next meeting.
Capital Economics economist Paul Ashworth said last week that the remarks could “trigger carnage in the bond and equity markets” if the public statements fail to appease market demands for clear signaling in favor of easier monetary policy.
Powell’s remarks come four weeks before the Fed’s September deliberations, which markets are estimating with near certainty will result in a 25 basis point reduction in the benchmark interest rate.