Unveiling the Tension: Wall Street's Dive as Fed Minutes Approach

Unveiling the Tension: Wall Street's Dive as Fed Minutes Approach

• Disappointing May factory orders in the United States fall short of expectations, pointing to potential challenges in the manufacturing sector.

• Eagerly anticipated, the Federal Reserve minutes are set to be unveiled at 2:00 p.m. ET, capturing the attention of market participants keen on gaining insights into the central bank's deliberations.

• Across the board, the indexes experience a mild downturn, with the Dow declining by 0.16%, the S&P dipping by 0.05%, and the Nasdaq showing a marginal retreat of 0.07%.

• Moderna's soaring ascent fueled by a groundbreaking partnership to spearhead the development of mRNA medicines in the vast landscape of China.

• The ripple effect of China's stringent export curbs reverberates through the chip stocks market, triggering a downward slide and unsettling investors.

On 5 July: Wall Street's primary indices experienced a decline on Wednesday, anticipating the release of the Federal Reserve's June meeting minutes. Investor sentiment was dampened by weak economic data from the United States and China, along with escalating tensions between the two nations. As per the Commerce Department's report, U.S. factory orders rose below the expected level in May, fueling concerns about a potential slowdown resulting from high-interest rates. The manufacturing sector showed a further decline last month.

Investors are mainly focused on the Federal Reserve's minutes, which are set to be released around 2 p.m. ET. They are seeking hints regarding the central bank's monetary policy direction. More economic data, including the non-farm payrolls, is scheduled for release later this week, which could influence the trajectory of the Fed's interest rates.

According to CME's Fedwatch tool, the probability of a 25-basis-point rate increase in July stands at 88.7%. However, traders have priced in only a 17.7% chance of another hike in September. Quincy Krosby, chief global strategist for LPL Financial, remarked that Federal Open Market Committee Chair Powell has acknowledged the existence of a disagreement within the Fed between the more dovish and the more hawkish factions. Given their consistent campaign of raising rates, this raises the question of why they chose to skip rate hikes during the June meeting.

Shares of chip companies Intel (INTC.O) and Micron Technology (MU.O) each declined by 2% after China announced export controls on certain metals widely used in the semiconductor industry. This move adds to the escalating tensions surrounding access to high-tech microchips between Beijing and Washington. The Philadelphia SE Semiconductor Index (.SOX) experienced a decline of 1.4%.

Wall Street had a modest start to the new quarter in a shortened session on Monday, following a significant AI-driven rally in the first half of the year. Tesla (TSLA.O) led the gains after the electric-vehicle company reported record second-quarter deliveries.

As of 11:46 a.m. ET, the Dow Jones Industrial Average (.DJI) was down 56.47 points, or 0.16%, at 34,362.00. The S&P 500 (.SPX) showed a decrease of 2.44 points, or 0.05%, at 4,453.15, while the Nasdaq Composite (.IXIC) recorded a decline of 9.20 points, or 0.07%, at 13,807.58.

By mid-day, eight out of the 11 major sectors of the S&P 500 were experiencing declines. Material shares (.SPLRCM) faced the most significant losses, down by 2.0%.

Meta Platforms (META.O) showed a rise of 3.4%, outperforming other mega-cap tech and growth companies, as the launch of its Twitter-rival app, Threads, is expected on Thursday. Danni Hewson, head of financial analysis at AJ Bell, commented that investors are anticipating the potential of Meta's app to be a "Twitter-Killer."

United Parcel Service (UPS.N) experienced a decline of 1.5% following accusations between the Teamsters Union and the postal service operator about each other's departure from contract negotiations.

Moderna (MRNA.O) rose by 3% after the pharmaceutical company signed an agreement to explore research, development, and manufacturing opportunities for mRNA medicines in China.

General Motors (GM.N) gained 1.1% after reporting positive second-quarter U.S. auto sales. The easing of supply chain pressures contributed to the company's performance.

On the NYSE, declining issues outnumbered advancers with a ratio of 1.64-to-1, while on the Nasdaq, the ratio was 1.74-to-1. The S&P index recorded 14 new 52-week highs and one new low, while the Nasdaq recorded 37 new highs and 45 new lows.


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