The Dow Jones Industrial Average dropped over seven-tenths of a percent. The S&P 500 was off eight-tenths. And the Nasdaq fell nearly 1.2 percent.
Stocks had surged into the end of last year on optimism that inflation was ebbing, the economy would avoid recession, and the Federal Reserve was ready to begin cutting interest rates.
But that enthusiasm began to wane, and minutes from the Federal Reserve's December policy meeting released Wednesday further tempered expectations, says Anna Rathbun, chief investment officer at CBIZ Investment Advisory Services.
"December was really extraordinary. The Fed (US Federal Reserve) went to suggesting that there may be three rate cuts. They didn't say when in 2024, just the entire calendar year and the market interpreted that as we've reached peak rates and now we're going to start cutting. And it became very aggressive in its expectations. Today's meeting minutes basically tell us that the Fed wasn't looking at it that dovishly, that relative to the market expectations, we are looking at a relatively hawkish Fed and investors are walking some of that back."
The minutes released Wednesday shed little light on when rate cuts might commence.
Financial stocks traded lower: Charles Schwab dropped 3% and Blackstone fell 4.6% after both were downgraded by Goldman Sachs from "buy" to "neutral."
But shares of Citigroup gained for a second straight day, rising 1.1% to it's highest finish since mid-August 2022 on a price target upgrade and an up-beat analyst report from Wells Fargo a day earlier.
