By Yasin Ebrahim
biedexmarkets.com – The S&P 500 and Nasdaq closed at record highs Wednesday, as falling yields lifted tech stocks while the Fed’s June meeting pointed to a lack of cohesion among members on when the central bank should begin tapering its bond purchases.
The rose 0.3% to a record of 4,358.13. The gained 0.30%, or 104 points, the was up 0.1% to a record 14,665.1.
Federal Reserve policymakers generally agreed that the threshold to begin scaling back its monthly bond purchases had not yet been met, according to the Fed’s June meeting minutes released Wednesday. But there was uncertainty on when conditions to taper will met as some members expected the threshold to be met earlier than expected, while others preferred to wait for incoming economic data.
“The Committee’s standard of ‘substantial further progress’ was generally seen as not having yet been met, though participants expected progress to continue,” the minutes showed. There were, however, various participants that expected the conditions for the taper threshold to be “met somewhat earlier than they had anticipated at previous meetings in light of incoming data.”
The uncertainty of the timing of tapering drew a muted reaction in markets as U.S. bond yields remained near the lows of the day. The plunge in bond yields has been largely attributed to concerns over peak growth and inflation, but some suggest the downward a spiral is more structural rather than fundamental as investors have been forced to unwind their bearish bets on bonds.
“A lot of people were maybe late to the game putting that short position in Treasuries on, and now we’ve basically seen a lot of shorts unwind that has exacerbated the move downward,” John Luke Tyner, Portfolio Manager at Aptus Capital Advisors said in an interview with biedexmarkets.com on Wednesday.
Against the backdrop of falling bond yields, meanwhile, growth corners of the market like tech continued to rack up gains, though social media stocks were lagging behind.
Facebook (NASDAQ:) remained below the flatline after former President Donald Trump said he is filing a class-action lawsuit against the social media giant and other tech giants including Twitter and Google as well as their chief executives because of bans imposed on him and others.
Google-parent Alphabet (NASDAQ:) recovered losses, while Twitter (NYSE:) fell 2%.
Materials and industrials, meanwhile, were also among the biggest sector gainers, while energy slipped further into the red after oil prices reversed gains.
Oil prices continue to lose ground as the failure of OPEC+ to agree a new output plan, stoked concerns that members of the production-cut accord may break away from the agreement, potentially leading to uptick in global supplies.