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The S&P 500 Index fell on Wednesday as FOMC meeting minutes showed some policy makers were concerned about the lack of price inflation in the US economy.
The S&P 500 spent most of the day in the red and eventually closed lower by -0.15%, (although the index did manage to finish off its lows).
Losses were also felt in technology and small-cap shares as the Russell 2000 Index dropped -0.4% and the Nasdaq fell back -0.57%.
FOMC Minutes
Meeting minutes from the Federal Reserve Open Market Committee was the big event of the day and policy makers expressed concern that inflation expectations in the US economy had not improved sufficiently. They spoke of the need to keep interest rates low for a ‘considerable time’.
Although such comments are often enough to propel stock markets to fresh gains, traders seemed a little unnerved by the lack of certainty expressed by Fed officials.
7 out of 10 main industries in the S&P 500 finished lower on the day while phone shares were also hit hard, with Verizon Communications Inc. falling 1.4%.
It wasn’t all doom and gloom, however. Retailers jumped across the board as a number of stores, including Target and Lowe’s, reported better than expected earnings.
Technicals & Outlook
The recent technical picture has been somewhat bearish for stock markets. Momentum has slowed, trading ranges have become tight and volume has been low.
It would be no surprise to see markets take another dip from here and our analysis tells us to be bearish at the present time.
Although plenty of indicators are in bullish mode, Elliott wave is a first wave down and we are therefore looking for downward moves over the next couple of days.
Further out, we are also bearish and see the possibility of the S&P 500 dropping to 1,890 over the next few weeks.
Thierry Laduguie is Trading Strategist at www.bettertrader.co.uk
