Updated at 4:15 pm EST
Stocks finished lower Wednesday, while Treasury bond yields dipped and the dollar eased against its global peers, following the release of minutes from the Federal Reserve's July policy meeting, which suggested it's likely to use incoming data, as opposed to a preferred policy path, to determine the size of future rate hikes.
On Wall Street, the S&P 500 finished down 0.72%, while the Dow Jones Industrial Average fell 172 points, or 0.50%, to 33,980. The tech-focused Nasdaq lost 1.25%.
Benchmark 10-year Treasury note yields, meanwhile, were little-changed at 2.891% while 2-year notes were pegged at 3.276%. The U.S. dollar index, which tracks the greenback against a basket of six global currency peers, was marked 0.14% higher at 106.64.
Stocks ended higher again yesterday after better-than-expected second quarter earnings from Walmart (WMT) and Home Depot (HD) , alongside what appears to be a solid rebound in GDP growth prospects, lifted the Dow past the 34,000 point mark for the first time since May.
The gains, which followed a blowout July jobs number that included 528,000 new hires alongside wage growth of 5.2%, also added to concerns that inflation readings may accelerate again over the months ahead.
An overnight rate hike by the Bank of New Zealand, its fourth in succession, as well as a searing reading of 10.1% for July inflation in Britain, the highest in forty years, cemented those concerns, lifting the odds of another jumbo Fed rate hike in September to around 48.5% overnight, according to the CME Group's FedWatch.
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Minutes of the Federal Reserve's July policy hinted towards smaller rate hikes over the back half of the year, with Chairman Jerome Powell and his colleagues content to focus on a wealth of data prior to their next decision in September.
The July minutes, published at 2:00 pm Eastern time, will detail the thinking behind the Fed's second consecutive 75 basis point rate hike, which took the benchmark Fed Funds rate to a range of between 2.25% to 2.5%. Powell said at the time that the Fed 'wouldn't hesitate' to execute another large rate hike if the Open Markets Committee were to deem it appropriate.
The U.S. Treasury curve remains steeply inverted -- a condition that has preceded nearly every recession for the past 25 years -- even as the Atlanta Fed's GDPNow forecasting tool suggests the economy is growing at a 2.5% clip.
Retail sales were also focus again Wednesday after the Commerce Department published official July data prior to the start of trading that illustrated the impact of plunging domestic gas prices.
July retail sales were essentially unchanged from the previous month to a collective $682.8 billion, the Commerce Department said, just shy of the Street consensus forecast of a 0.1% gain. The June total was revised lower, to a gain of 0.8%, the Commerce Department report showed, from the original estimate of a 1% advance.
Stripping out the auto sector, June retail sales were also up 0.4%, the report noted, while stand-alone sales of gasoline fell 1.8% as prices retreated from the record high $5.017 per gallon hit during the month of June.
Target (TGT) shares slumped 2.7% after it posted much weaker-than-expected second quarter earnings as deep discounts put in place to shift excess inventory ate into the big box retailer's bottom line.
Bed, Bath & Beyond (BBBY) shares, meanwhile, powered 11.7% higher again Wednesday as the meme stock favorite extended gains following a bullish options bet from GameStop (GME) chairman Ryan Cohen.
In overseas markets, European stocks were also lower, with the Stoxx 600 falling 0.95% by the close of trading in Frankfurt, while overnight in Asia the region-wide MCSI ex-Japan index gained 0.16% and the Nikkei 225 rose 1.23% to re-take the 27,000 point level for the first time in seven months.
In other markets, oil prices reversed their recent slide, although U.S. crude is within sight of a six-month low, ahead of weekly Energy Department data on domestic crude stocks at 10:30 am Eastern time.
The EIA said stocks fell by 7.1 million barrels last week, as crude exports accelerated to around 5 million barrels per day as well as another 5.7 million barrels in refined crude products.
WTI crude futures for September delivery were marked $1.18 higher at $87.71 per barrel while Brent contracts for October, the global benchmark, rose 94 cents to $93.28 per barrel.