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The S&P 500 recovered from the lows to end at record high levels, although gains in all three indices were marginal. The Dow Jones also recovered over 300 points from the day’s low. However, futures are trending lower currently. The recovery mostly came during the final minutes of the trading session.
Fed minutes only reiterated the cautious stance by US policymakers amid economic strength and stubborn inflation. Treasuries advanced as officials also discussed pausing or slowing the balance-sheet runoff until the debt-ceiling drama is resolved.
“They will sit and wait before cutting again,” said Peter Boockvar, author of The Boock Report. “I say ‘cut’ because it still seems like they have an easing bias. The Fed also commented on the balance sheet. This could also be a reason why yields dipped a bit.”
In a sign of caution, defensive industries outperformed. Quantum-computing shares jumped on Microsoft Corp.’s new chip. Homebuilders sank after results from Toll Brothers Inc. and key construction data indicated the residential real estate market may be in store for more turbulence.
Shares of major US Defence contractor Palantir fell over 10% and extended its drop afterhours after the Washington Post reported that defence secretary Pete Hegseth plans on cutting military spending by 8% every year for the next five years.
The yield on 10-year Treasuries declined two basis points to 4.53%. The Bloomberg Dollar Spot Index rose 0.2%.
“I think there’s a lot of noise tied to DOGE, Elon Musk and tariffs in the short-term, which is what you’re seeing today. And I think a lot of this stuff will linger,” said Jim Elios, founder and chief investment officer at Elios Financial Group. “It’s the Trump effect with headlines that are weighing on markets and causing some pain. In the long term, I’m still really bullish about how this can become a pro-business environment,” added Elios.
