U.S. Stocks Decline After Hawkish Fed Minutes
U.S. stocks traded lower on Thursday after the latest Federal Reserve meeting minutes signaled a more hawkish policy stance than markets had anticipated. Investors also focused on Walmart’s first quarterly report under its new chief executive.
At 12:11 ET, the S&P 500 fell 0.5% to 6,850.40, while the tech-heavy NASDAQ Composite dropped 0.4% to 22,666.53. The Dow Jones Industrial Average declined 0.7% to 49,311.25.
The pullback followed gains on Wednesday, when technology stocks rebounded and shares of Nvidia rallied, helping offset concerns sparked by the Fed minutes.
Fed Minutes Signal Caution on Rate Cuts
Minutes from the Federal Reserve’s January meeting showed that nearly all Federal Open Market Committee (FOMC) members supported keeping interest rates unchanged.
However, policymakers were divided on the future direction of monetary policy. Several officials signaled they would consider further rate hikes if inflation remains above the Fed’s 2% target.
The minutes also highlighted uncertainty around artificial intelligence and its potential impact on inflation, with officials split on whether AI will accelerate or dampen price pressures.
With the Fed appearing in no hurry to cut rates, markets adopted a cautious tone.
Trade Deficit Widens, Jobless Claims Improve
Thursday’s economic data offered mixed signals.
U.S. government figures showed the trade deficit widened to $70.3 billion in December, pushing the annual deficit to $901.5 billion.
At the same time, weekly initial jobless claims fell to 206,000, below expectations of 223,000. The decline suggests the U.S. labor market remains resilient.
Investors now await Friday’s key data releases, including the personal consumption expenditures (PCE) price index — the Fed’s preferred inflation gauge — and a preliminary estimate of fourth-quarter GDP growth. Both reports could significantly influence expectations for future rate cuts.
Walmart Beats Earnings but Issues Conservative Outlook
Shares of Walmart were in focus after the retail giant posted better-than-expected quarterly revenue and earnings. The company also announced a new $30 billion share repurchase program.
Despite the solid results, Walmart issued profit guidance for the current quarter and fiscal 2027 that fell short of analyst forecasts. The cautious outlook came under new CEO John Furner, who recently succeeded longtime leader Doug McMillon.
Analysts noted that Walmart’s conservative guidance is consistent with its historical approach and that the company remains well-positioned thanks to strong consumer demand, competitive pricing, and growth in e-commerce.
Oil Prices Jump on Middle East Tensions
Oil prices surged more than 2% as rising military activity in the Middle East heightened concerns about potential supply disruptions.
Brent crude climbed 2.2% to $71.86 per barrel, while U.S. West Texas Intermediate (WTI) rose 2.5% to $66.69 per barrel. Both benchmarks had already gained more than 4% in the previous session.
Geopolitical risks in the Persian Gulf and stalled Russia-Ukraine talks have reinforced fears over energy supply vulnerability. Additional support came from industry data showing a 609,000-barrel decline in U.S. crude inventories, according to the American Petroleum Institute.
Official inventory data from the Energy Information Administration is expected later in the day.
