Stocks fell for a second day on Wednesday after minutes from the Federal Reserve's latest policy-setting meeting gave more insight on how fast the central bank plans to tighten its monetary policy to combat inflation; the Fed's more aggressive moves have sparked concerns of a potential recession. The Dow Jones Industrial Average fell over 140 points, while the S&P 500 Index and Nasdaq Composite declined about 1% and 2%, respectively.
Here's how the market settled on Wednesday:
S&P 500 Index
Dow Jones Industrial Average
Nasdaq Composite Index
Fed minutes show plan to reduce balance sheet, more aggressive rate hikes:
Federal Reserve official discussed how they plan to reduce their trillions in bond holdings at their recent policy-setting meeting in March, according to minutes released Wednesday afternoon.
"Participants reaffirmed that the Federal Reserve's securities holding should be reduced over time in a predictable manner," the minutes showed. Officials "generally agreed" that a maximum of $60 billion in U.S. Treasurys and $35 billion in mortgage-backed securities needs to be reduced in a phased approach over three months, likely starting in May.
Officials also discussed the pace of interest rate hikes, with policymakers mostly in favor of more aggressive moves. "Many participants noted that one or more 50 basis point increases in the target range could be appropriate at future meetings, particularly if inflation pressures remained elevated or intensified," the minutes said.
Mortgage applications fall for fourth straight week:
U.S. mortgage applications declined for a fourth consecutive week last week, as rising mortgage rates discourage homeowners from refinancing and would-be buyers from entering the market.
The Mortgage Bankers Association's' weekly index showed applications fell 6.3% for the week ended April 1, following a 6.8% decline during the previous week. Moreover, references dropped 10% from the prior week and 62% from the same week last year, while purchases fell 3% week-over-week on a seasonally unadjusted basis and 9% year-over-year.
"Mortgage application volume continues to decline due to rapidly rising mortgage rates, as financial markets expect significantly tighter monetary policy in the coming months. The 30-year fixed mortgage rate increased for the fourth consecutive week to 4.90% and is now more than 1.5 percentage points higher than a year ago," Joel Kan, MBA associate vice president of economic and industry forecasting, said in a press statement.
"The hot job market and rapid wage growth continue to support housing demand, despite the surge in rates and swift home-price appreciation,"Kan added. "However, insufficient for-sale inventory is restraining in purchase activity."
Here's how benchmarks started trading after market open:
S&P 500 Index: -0.80% or -36.19 points to 4,488.93
Dow Jones Industrial Average: -0.66% or -229.02 points to 34,412.16
Nasdaq Composite Index: -1.27% or -178.10 points to 14,023.64
