Wall Street records the first loss of 2022 as markets react to Fed’s minutes

• The Dow Jones Industrial Average fell by 202 points

• Wall Street's main indices recorded their first losses in 2022

The Dow Jones Industrial Average recorded its first loss of 2022 on Wednesday as stocks fell after the Federal Reserve released the minutes of its last policy gathering in 2021 which mentioned reduction of the central bank’s balance sheet and raising rates.

The Dow Jones Industrial Average fell by 202 points, or 0.6%, to 36,592, after turning negative in afternoon trade. The tech-heavy, Nasdaq Composite Index shed 370 points, or 2.4%, to 15,249. The S&P 500 fell by 57 points, or 1.1%, to 4,739.

Read more: Stock futures surges on first trading day of 2022 betting for economic recovery amidst Omicron

The yield on the 10-year Treasury note in the bond markets rose 4 basis points to 1.70% on Wednesday, boosting financial shares, while bringing down technology and other growth-oriented sectors.

The minutes revealed conversations among some Fed officials around the central bank looking at raising rates and cutting its current $8.8 trillion sized balance sheet, sooner to tackle higher costs of living. 

Read more: Apple stock to grow faster than the economy, investor expects

Mega cap tech stocks were all lower. Salesforce dropped 7.7% following a downgrade from UBS. UBS also cut Adobe, sending its shares down 6.5%. Among chipmakers, Advanced Micro Devices fell about 5%. Nvidia and Marvell lost about 4%.

Bank of America gave an upgrade to Pfizer, noting that the company’s profits from Covid treatments provide upside for the stock. Pfizer’s shares moved 2.3% higher, reported CNBC.

The Federal Reserve had convened on December 14 and 15 after which it said that it would end its bond purchases in March 2022 and will gradually increase the interest rates by the end of 2022 and would buy $60 billion of bonds each month starting January and would end the program by March. 

The Fed had forecasted that inflation would run at 2.6% in 2022, compared to the earlier prediction of 2.2%, and the unemployment rate would fall to 3.5%.

Also Read: Fed to wind-down bond purchases, signals three rate hikes in 2022

Inputs from CNBC

Picture Credits: The Balance