US Stocks Fall As Traders Weigh Fed’s Next Move

US stocks experienced a slight decline as investors awaited the release of the Federal Reserve meeting minutes, hoping to gain insights into the central bank's upcoming actions later this month.

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The S&P 500 slipped 0.2% ahead of the Wednesday publication of the Fed's last policy meeting minutes. The June meeting surprised Wall Street when officials halted their cycle of interest rate hikes after ten consecutive increases. Notable movers on Wednesday included United Parcel Service Inc., which dropped 1.6% as employee strike concerns over pay grew, and Coinbase Global Inc., which experienced a decline following a downgrade.

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The yield on the two-year Treasury, which is sensitive to monetary policy, edged lower to 4.93%, while the 10-year yield stood at 3.91%. The inverted yield curve is often interpreted as a potential indicator of an impending economic downturn. The Fed has projected two additional rate hikes for this year, which could potentially impact economic growth and corporate profits.

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The slower recovery in China and uncertainty surrounding the Federal Reserve's rate-hiking trajectory have tempered global equity demand after a strong performance in the first half of the year, largely driven by large-cap technology stocks.

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Anticipating further interest rate hikes from the Fed and the European Central Bank in July, an aggregate measure of borrowing costs calculated by Bloomberg Economics now indicates a peak of 6.25% for this quarter, an increase from the previous projection of 6% three months ago.

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