US Markets Oscillate Wildly Following Release of Fed Minutes


Emerging market currencies and stock markets remained under pressure today. The Brazilian real, Turkish lira, Indian rupee, and Mexican peso all reached new multiyear lows against the US dollar. Chinese and Japanese markets were off slightly and the Indian Sensex 30 was down 1.86%. Also, European markets all finished in the red.

US equities opened the day lower and remained lower for much of the day. Existing home sales were released in the late morning, showing an extreme rise to a 5.39 million annualized rate -- up 6.5% from the month prior and the biggest rise in eight years. Much of the rise was due to a 6.3% gain in single family home sales. Housing-related stocks showed strong gains for much of the day, but only closed up 0.2% for the day.

The minutes from the July Federal Reserve monetary policy meeting were released at 2 p.m. ET and caused a great deal of volatility. The takeaway: The reduction of asset purchases, a plan that Chairman Bernanke had put forth at the June meeting, was generally agreed upon, although a few people urged patience due to slowing inflation and growth. Equity markets initially dropped as much as 1% on the day before rocketing back into positive territory. Before the day was out the S&P 500 (INDEXSP.:INX) had returned to levels that it had started at shortly before the minutes were released. Treasuries came under intense pressure, reaching new multiyear highs as the 10-year yield rose eight basis points to 2.89%.

Target ( TGT ) reported 2Q earnings this morning, posting in line EPS of $0.95, but missed on revenues at $17.12 billion vs. estimates of $17.27 billion. Forward guidance for earnings in the rest of the year were on the low end of the prior guidance, and full-year comparable sales were guided lower at +1% from +2-2.5%. Target noted on the earnings call that sales were lower due to higher payroll taxes, lower labor force participation, and lower income growth. Additionally, Target noted that increased auto and home sales were crowding out other spending.

Tomorrow's Financial Outlook

Tomorrow morning, initial jobless claims will be released. Economists are expecting a gain of 330,000 claims after claims reached a six-year low of 320,000 in the week prior. The 4-week moving average of claims currently stands at 332,000. Later in the day the Kansas City regional manufacturing survey will be released with no change expected from the prior month.

There will be a few pieces of market-moving news overnight. China will release manufacturing PMI later this evening and the eurozone will release the first estimate of manufacturing and services PMI. Lastly, Canada will release retail sales shortly before the US markets open.

Tomorrow is the busiest day of the week for earnings in the US as earnings season comes to a close. Dollar Tree ( DLTR ), Sears Holdings ( SHLD ), A bercrombie & Fitch ( ANF ), Gamestop ( GME ), Gap (GPS), Aeropostale (ARO), and Pandora (P) are scheduled to report.

Twitter: @Minyanville

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Stocks

Referenced Stocks: ANF , DLTR , GME , SHLD , TGT



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