Stocks Rally After Fed Releases Minutes

S&P 500 Regains Some Losses

Even though it seems like tariffs weren’t in the news on Thursday, they were because they were mentioned in the Fed Minutes. Furthermore, there was tariff related news after the bell which might send stocks lower on Friday. Trump stated as much as $500 billion worth of goods could be subject to tariffs with China if the country retaliates after the $34 billion in American tariffs are implemented starting 12:01 AM on Friday.

The S&P 500 was up 0.86% on Thursday. It’s debatable how important this is because the market sold off into the 1:00 PM close on Tuesday on low volume. It’s easy for there to be meaningless big swings on holiday shortened days. The good news is the S&P 500 gained more on Thursday than it lost Tuesday. The Nasdaq was up 1.12% and the Russell 2000 was up 1.15% as it tries to repeat its remarkable first half in the second half of this year. Consumer staples and tech lead the market higher as they were up 1.46% and 1.47% respectively. Energy was the only loser as it fell 0.16%.

FOMC Minutes Have Something For Everyone

I mentioned that the headlines appeared to not be dominated by the tariffs for once. That was because the big news of the day was the FOMC Minutes. These Minutes were from the June 13th meeting. The Minutes are always interesting because it’s sometimes clear to see that the Fed was wrong on an event which occurred since then. It’s also fun to guess how the Fed will react to the news of the past few weeks now that we know its thoughts from about 3 weeks prior.

You can take quotes from the Minutes to support the narrative that the Fed is either hawkish or dovish. The Fed once again mentioned the tariffs as a reason to be cautious. As I mentioned previously, the one way the trade tensions’ impact on the stock market can be mitigated is if the tensions cause the Fed to be more dovish. With the great economic growth in Q2, the tariffs are an important cog holding the Fed from getting as hawkish as possible to stop the economy from overheating. To be clear, the Fed still wouldn’t be very hawkish because of its symmetrical approach to inflation, but these tariffs certainly temper hawkish rhetoric. Keep in mind, the trade tensions have escalated since the Minutes which means the Fed is likely leaning even more dovish because of them. The August meeting could see a dovish policy change if they keep escalating.

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