The FOMC will not announce a policy change but could hint at the next cycle of interest rate hikes when its minutes of a July meeting are released Wednesday [Xinhua]
US stocks, which have in previous sessions closed at record levels and performed at their best in more than 15 years, took a breather early Tuesday as both oil and gold prices rose and the US economy continued to deliver a mixed bag of news.
At press time, the S&P 500 dipped 0.26 per cent to 2,184.51, while the Dow Jones Industrial average trimmed 0.42 per cent from its record high on Monday, opening at 18,558.60.
The Nasdaq also followed suit opening 0.55 per cent lower from its high a day earlier to 5,233.20.
US stocks have been buoyed by resurgent oil prices.
At press time, the US benchmark West Texas Crude was up 0.33 per cent to $45.89 a barrel.
International benchmark Brent Crude was up 0.10 per cent to $48.40.
Oil prices had declined rapidly over the past month on news of oversupply and storage worries, briefly coming in sight of $30 a barrel.
But they began to rebound late last week and are now at five-week highs after increased chatter that the world’s biggest exporters Russia and Saudi Arabia were interested in holding another round of talks with other Organization of Petroleum Exporting Countries (OPEC) to find a way to cap output in a bid to reduce oversupply and boost prices.
Meanwhile, chances of a Federal Reserve interest rate hike in September appeared slim after Federal Reserve Bank of San Francisco President John Williams called for a new approach in how US monetary and fiscal policy is determined.
He said that the US economy had settled into a ‘low-productivity and low-growth’ pattern and that central banks needed to look beyond interest rates to find new ways to boost growth.
The US economy, for its part, continued to move forward but with a mixed bag of data.
On Tuesday, the Federal Reserve delivered its industrial production and capacity utilization report for July. It showed that industrial production jumped by 0.7 per cent in July, the highest change in 21 months.
The Labor Department for its part released its consumer price index July report which showed that little had changed since June. In June, the Department had reported a 0.2 per cent rise in consumer prices, but that remained level in July.
The Fed has said that a two per cent inflation rate is ideal for the US economy, but without factoring in food and energy prices in July, the inflation rate went up only 0.1 per cent for the month. The current inflation rate hovers at around one per cent.
The report comes on the heels of Friday’s Commerce Department report that US retail sales failed to rise in July.
Slimmer chances of a Fed rate hike strengthened the yen overseas. The dollar briefly weakened below the 100 yen mark before settling 100.35, nearly one per cent down from opening.
Minutes of the Fed’s Open Market Committee (FOMC) in July are expected to be released on Wednesday.
The BRICS Post with inputs from Agencies
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