US open: Stocks head south as traders await Fed minutes

20 August 2019

(Sharecast News) - Stocks headed south at the opening bell as market participants were focussed on the state of US-China relations and the outlook for monetary policy.
As of 1530 BST, the Dow Jones Industrial Average was down 0.25% at 26,070.31, while the S&P 500 had lost 0.37% at 2,912.96 and the Nasdaq Composite started out the session 0.23% weaker at 7,984.78.

The Dow opened 65.48 points lower on Tuesday after finishing the previous session in the green, as investors reacted to news from the weekend that <em>the Commerce Department</em> would grant Chinese telco giant <strong>Huawei</strong> a further 90-day reprieve from a prohibition on US companies trading with it.

But tensions with China remained a major focal point of Tuesday's session after Donald Trump said he had no desire to work with Huawei despite the Commerce Department granting the reprieve.

Elsewhere, the outlook for further easing by Federal Reserve was front and centre on investors' minds ahead of the release of minutes from the Central Bank's meeting on Wednesday. Trump called on the Fed, on Monday, to cut rates by at least 100 basis points.

Fed chair Jerome Powell was set to deliver the keynote speech at the Jackson Hole central banking symposium on Friday.

<em>Oanda</em>'s Craig Elam said: "Once again we're in a situation whereby the week hangs on what Jerome Powell says about interest rates and whether he can live up to the huge expectations set by the market.

"Given his reluctance in the past and the current positioning, I feel the market has set itself up for disappointment but I guess we'll see."

The Federal Open Market Committee was next set to meet to decide on policy on 17-18 September, when another 25 basis point reduction in the target range for the Fed funds rate was widely expected.

In terms of data, <em>the Federal Reserve Bank of Philadelphia </em>revealed that non-manufacturing general business activity for the region plummeted to 7.5 versus the 21.4 reading turned in a month prior.

Fed chair for banking supervision, Randal Quarles, was due to deliver a speech at 1700 BST.

On the corporate front, <strong>Home Depot</strong> moved ahead in early trade after turning in better-than-expected profits, while <strong>Medtronic</strong> gained after coming in ahead of quarterly sales estimates.

With trade woes still in focus, tech-related stocks such as <strong>Micron Technology</strong> and <strong>Advanced Micro Devices</strong> dipped in early trade, while <strong>Netflix</strong> shares pulled back 3%.

Also, <strong>Citigroup, Bank of America</strong> and <strong>JP Morgan Chase</strong> all dropped roughly 1% as the benchmark 10-year yield fell five basis points to 1.545%.