U.S. stocks close lower after FOMC September minutes

U.S. stocks closed lower on Wednesday following the publication of the Federal Open Market Committee's (FOMC) September meeting minutes, which revealed that the policymakers had decided to maintain the strict fiscal policy by raising interest rates by 75 basis points.

The Dow Jones Industrial Average closed at 29,210.85, falling by 28.34 points or 0.1 percent despite an increase the day before. The Nasdaq Composite closed at 10,417.10, losing 9.09 points or 0.09 percent, while the S&P 500 closed at 3,577.03, dropping 11.81 points or 0.33 percent.

Data showed that the declined stocks outnumbered the growing ones, at an overall ratio of 1.64-to-1. Nasdaq posted 433 new lows against 20 new highs, while S&P 500 had 78 new lows against similar 52-week highs. In the S&P 500 index, real estate and rate-sensitive utilities were among the biggest downers, falling 1.4 percent and 3.4 percent, respectively.

Alco Corp and PepsiCo Inc were among the gainers on Wednesday. Metal company Alcoa Corp’s stocks rose 5.3 percent, with the government considering limiting imports of Russian aluminum following the escalation of the Ukraine War. PepsiCo Inc jumped by 4.2 percent after the company increased its projected revenue and profit due to strong product demands.

On Wednesday, the U.S. stock exchanges showed a total volume of 10.01 billion shares. The number was lower than the session average in the last 20 trading days, which showed 11.68 billion shares.

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Stock market weakness in the past week was tied to the growing fears among investors against the aggressive fiscal policy by the Fed that could lead to a depression in the economy.

The minutes revealed that policymakers at the Fed insisted the cost of doing too little to tame inflation would be higher than the cost of doing too much. LPL Financial head global strategist Quincy Krosby said that the policymakers were "in unison” regarding their commitment to lowering inflation, which is at a 40-year high.

"There's an understanding now the Fed is going to keep going,” Krosby said. “The question for the market is where is the transition from 75 basis points to 50 and 25. That is what the market is focused on I think."

The September producer price index (PPI) was released on the same day as the meeting minutes, showing a higher-than-expected rise at 8.5 percent. This figure, however, was lower than August’s PPI, which recorded an 8.7 percent increase.

September CPI data

Investors and economists consider the September consumer price index (CPI), to be released on Thursday morning, more essential in determining the inflation rate. Stakeholders consider this data as “a key input” before the next FOMC meeting in early November.

Experts have predicted the September CPI data will show a rise of 0.4 percent, lower than 0.6 percent in August. The core inflation annual rate, however, is projected to be 6.5 percent, an increase from August's 6.3 percent.

“The core inflation is going to be higher, so it’s still an inflation that hasn’t peaked yet in many ways,” KPMG head economist Diane Swonk said. “There’s still more risks of supply side shocks.”

Rental inflation is projected to remain high in September CPI, with the actual rental market lagging. Goldman Sachs economists explained that the declining number of rents on new leases, as well as the increase in multifamily building constructions, might lead to a deceleration in housing inflation.