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The major U.S. stock indexes finished lower on Wednesday after minutes from July’s U.S. Federal Reserve meeting failed to indicate a more dovish shift in monetary policy, possibly in September. Particularly disappointing for investors was the Fed ruling out for now more dovish monetary policy measures such as yield curve control and the adoption of an average inflation target.
In the cash market on Wednesday, the benchmark S&P 500 Index settled at 3374.85, down 14.93 or -0.50%. The blue chip Dow Jones Industrial Average finished at 27692.88, down 85.19 or -0.34% and the tech-based NASDAQ Composite closed at 11146.46, down 64.38 or -0.68%.
Fed Yield Cap Would’ve Sent Dovish Signal
Under yield-curve control, the Fed would cap yields at a specific point on the curve by buying 2- or 3-year maturities, for example, to reinforce guidance that rates are not going up anytime soon.
In minutes of the Fed’s July meeting, a majority of its monetary policy committee commented on yield caps and targets as a monetary policy tool. Of those who discussed this option, most judged that yield caps and targets would likely provide only modest benefits in the current environment.
Fed Sees Uncertain Path to Recovery
The Fed also raised concerns that the U.S. economy’s recovery from the devastating effects of the coronavirus pandemic faced a highly uncertain path.
Policymakers noted that the swift rebound in employment seen in May and June had likely slowed and that additional “substantial improvement” in the labor market would hinge on a “broad and sustained” reopening of business activity.
Apple Valued at $2 Trillion
Just two years after Apple became the first publicly listed U.S. company with a $1 trillion stock market value, the iPhone maker has now topped $2 trillion.
Apple now accounts for close to 7% of the S&P 500’s total market value. Its market capitalization is about equal to the combined values of the S&P 500’s 200 smallest companies.
Microsoft and Amazon follow Apple as the most valuable publicly traded U.S. companies, each at about $1.6 trillion. They are followed by Google-owner Alphabet, at just over $1 trillion.
Target Reports Monster Quarter
Target on Wednesday blew past every forecast on Wall Street for its fiscal second quarter as it attracted millions of new customers online, setting a record for same-store sales that drove profits up by an eye-popping 80.3% to $1.7 billion.
Shares were up nearly 13% Wednesday afternoon. It reached a 52-week high of $154.69, bringing up the company’s market cap to about $77 billion.