Market Snapshot: Stock market struggles for direction as Fed hints at coming rate hike

U.S. stocks were struggling for direction Wednesday, with the SP 500 and the Dow edging lower while the Nasdaq rose, as the minutes from the latest Federal Open Market Committee’s most recent meeting reaffirmed the central bank’s hawkish bias.

The publication of the Fed’s notes comes on a day when investors are trying to determine how the legal drama surrounding President Donald Trump will impact the market even as stocks are on the verge of passing the milestone as the longest bull run in history.

What are the main benchmarks doing?

The Dow Jones Industrial Average

DJIA, -0.28%

slid 60 points, or 0.3%, to 25,758. The SP 500 index

SPX, +0.02%

slipped less than a point to 2,862 and the Nasdaq Composite Index

COMP, +0.43%

advanced 27 points, or 0.4%, to 7,886.

On Tuesday, the Dow, SP 500 and Nasdaq Composite scored gains ranging from 0.2% to 0.5%.

Read: This bull market may soon silence all the critics

What’s driving markets?

The Fed minutes indicated broad-based support for another interest-rate hike in September with many officials stating that as long as economic data remain strong, “it would likely soon be appropriate to take another step in removing policy accommodation.” However, they also suggested that any tightening will have to pause if the U.S. trade tensions with partners continue to escalate.

On the political front, former Trump campaign chairman Paul Manafort late Tuesday was found guilty on eight charges including tax fraud, and the president’s former lawyer Michael Cohen said he violated campaign-finance law at President Donald Trump’s direction.

The market has gingerly navigated trade-war worries between the U.S. and China as investors focused on reports showing a healthy U.S. economy and solid corporate earnings. But the uncertainty following the legal developments for the two former associates of the president could influence financial markets.

Read: Here’s why the stock market remains immune to Trump’s legal woes

Existing-home sales ran at a 5.34 million seasonally-adjusted annual rate in July, down 0.7% versus June, the National Association of Realtors said Wednesday.

What are strategists saying?

Bill Merz, director of fixed income at U.S. Bank Wealth Management, predicted the Fed would raise interest rates by a quarter of a percentage point each in September and December, contributing to higher yields going forward.

“I think this political swirl around Trump has been happening for a year and half, but the market keeps telling that us that it doesn’t really matter because the economy is strong,” said J.J. Kinahan, chief market strategist at TD Ameritrade. That said, the strategist indicated that investors should be mindful of rising inflation and the dollar which could pose a risk to the integrity of the record bull-market run.

“I think that whenever you are at all time highs, you should always be a little cautious,” Kinahan said.

“I don’t think what happens with Trump is important to the market,” Maris Ogg, president at Tower Bridge Advisors, told MarketWatch.

She also said upbeat results from Target Corp. emphasized the perception that consumers are healthy and that the strongest among retailers are emerging from a period in which analysts and strategists believed Amazon.com Inc.

AMZN, +0.95%

to be the slayer of bricks-and-mortar establishments.

“I think the most interesting thing are the Target numbers. The market would be a lot higher if it weren’t for this Trump overhang stuff,” Ogg said.

Read: Here’s the case against the ‘longest bull market’ in history

Don’t miss: Investors may be underestimating the risk stocks face from the midterm elections

Which stocks are in focus?

Shares of Target

TGT, +3.11%

 shot up 3.8% toward a record, after the discount retailer reported better-than-expected fiscal second-quarter results, including the fastest growth in same-store sales in 13 years.

Lowe’s Cos.

LOW, +5.81%

shares surged 6.2% following quarterly earnings.

Urban Outfitters Inc.’s stock

URBN, -3.94%

rose after the retailer late Tuesday reported earnings and sales above Wall Street’s expectations but has since reversed direction to fall 2.4%.

Energy companies were among notable gainers on the back of strong crude oil prices. Marathon Oil Corp.

MRO, +3.69%

 rose 3.5%, Noble Energy Inc.

NBL, +4.89%

 gained 2.8%, and Devon Energy Corp.

DVN, +2.38%

 added 2.3%.

What are other markets doing?

Oil futures

US:CLU8

rallied, while the ICE U.S. Dollar Index

DXY, -0.14%

slid for a sixth straight day. Gold futures

GCZ8, +0.22%

settled moderately higher as the buck weakened.

European stocks

SXXP, -0.03%

finished mixed, as did Asian markets.

Read: Gear up for a no-deal Brexit: 5 areas to watch

—Victor Reklaitis contributed to this article

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