US stocks drop as Fed minutes raise tightening concerns

NEW YORK (AFP) - Wall Street stocks finished lower on Wednesday (April 5) after Federal Reserve meeting minutes sparked concerns about tightening US monetary policy.

US stocks had been solidly higher prior to the 1800 GMT release (2am on Thursday, Singapore time) of the minutes following data about strong US private sector hiring, according to payrolls firm ADP.

But the market reversed course after minutes from the Fed's March meeting showed policy makers wanted to move away, or slow, their post-crisis policy of reinvesting in Treasury bills and mortgage-backed securities, for which the Fed has built up a US$4.5 trillion (S$6.3 trillion) balance sheet.

 

"It looked as though we were going to have a good day because of the ADP numbers and the optimism about job growth, but then commentaries about the Federal Reserve thinking about cutting back its balance sheet has begun to give people pause," said Nicholas Colas, chief market strategist at Convergex.

The Dow Jones Industrial Average dropped 0.2 per cent to 20,648.15.

The broad-based S&P 500 shed 0.3 per cent to 2,352.95, while the tech-rich Nasdaq Composite Index tumbled 0.6 per cent to 5,864.48 after hitting an all-time intraday high earlier in the day.

Panera Bread Company surged 14.1 per cent after the restaurant chain agreed to be acquired by investment firm JAB Holding for about US$7.5 billion.

Monsanto rose 1 per cent after reporting that second-quarter net income jumped 28.7 per cent to US$1.4 billion behind increased sales in seeds and in its herbicide and crop-protection business.

PepsiCo dipped 0.1 per cent after announcing it was dropping an ad featuring supermodel Kendall Jenner that appeared to use the "Black Lives Matter" protests to promote the soda brand.

Pepsi apologised and said it did "not intend to make light of any serious issue."