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Dow Wobbles Ahead of Fed Minutes and Jobs Data—and What Else Is Happening in the Stock Market Today

How the Federal Reserve under Jerome Powell will handle red-hot inflation is key for investors.

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Stocks wobbled on Wednesday ahead of jobs data and minutes from the latest meeting of the Federal Reserve, which should provide investors fearful of recession their latest chance to predict the Fed’s monetary policy pathway.

Futures for the Dow Jones Industrial Average retreated 10 points, or less than 0.1%, after the index slipped 129 points on Tuesday to close at 30,967. S&P 500 futures signaled a start less than 0.1% lower with the tech stock-heavy Nasdaq poised to open just above flat; the S&P 500 and Nasdaq rallied 0.2% and 1.8%, respectively, in topsy-turvy Tuesday trading.

Overseas, the pan-European Stoxx 600 jumped 1.8% as stocks across the region bounced back from a steep fall on Tuesday. Asian indexes were firmly in the red, with the Shanghai Composite losing 1.4% amid concerns about a new spate of Covid-19 cases in Shanghai, which recently endured a severe and economically painful lockdown to deal with outbreaks of coronavirus disease.

The risk of recession continues to dominate investor sentiment. Facing the highest inflation in decades, the Federal Reserve has already moved aggressively to fight rising prices with higher interest rates. As it continues down a pathway of tighter monetary policy, the central bank risks spurring a downturn by denting economic demand.

“The momentum is clearly slowing and a recession is not impossible,” said Katie Nixon, the chief investment officer at Northern Trust Wealth Management. “[A] recession would probably look more like a garden-variety income statement recession and not the deeper and more damaging style of balance sheet recession that has followed large asset bubbles and suppresses consumer and corporate spending on a large scale.”

Minutes from the Fed’s June meeting may give investors their latest glimpse of the central bank’s pathway. The Fed hiked rates by a mega-sized 75 basis points last month; the typical rate hike is 25 basis points, or one-quarter of a percentage point.

Jobs data in the form of JOLTs job openings will also be closely watched as indicators of economic health. Signs of weakening could actually prove positive for stocks; should the U.S. economy appear weaker, it could tame further extreme moves from the Fed. Consensus expectations are for a print of 11.1 million job vacancies.

“U.S. JOLTs Job Openings will cause recession head-scratching above 11 million,” said Jeffrey Halley, an analyst at broker Oanda.

Write to Jack Denton at [email protected]

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