Fed signals it will start hitting the brakes

By CNN Business

Updated 5:11 p.m. ET, August 18, 2021
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4:09 p.m. ET, August 18, 2021

Stocks tumble into the close

From CNN Business' Anneken Tappe

Wall Street ended Wednesday’s session sharply in the red, after the Federal Reserve’s highly anticipated meeting minutes showed that the central bank is indeed mulling a taper to its monthly asset purchases in the near term. It could come as early as the end of the year, according to the minutes.

Stocks edged lower after the minutes were released but the selloff accelerated into the close.

The Dow closed 1.1%, or 383 points lower, and the S&P 500 also fell 1.1%. The Nasdaq Composite closed down 0.9%.

3:01 p.m. ET, August 18, 2021

Stocks slip following release of Fed minutes

From CNN Business' Anneken Tappe

Stocks edged lower following the release of the minutes from the Federal Reserve's most recent meeting.

The Dow dropped 0.2%, or 73 points, and the S&P 500 also fell 0.2%. The Nasdaq Composite held onto its gains, and remains up 0.2%.

Even though the minutes showed that there is no consensus on the exact timing for the tapering of the Fed's asset purchases as of yet, the central bank will likely go down that road sooner rather than later.

"In the short run, the market is going to remain focused on growth and Delta variant concerns," said Chris Zaccarelli, chief investment officer for Independent Advisor Alliance.

"All eyes are turning to the Jackson Hole Symposium next week but this too may turn out to be anti-climactic," said Michael Reinking, senior market strategist at the New York Stock Exchange, referring to the upcoming central bank symposium in Wyoming. "I don’t think Chair Powell will want to box himself in ahead of the [Fed's] September meeting, especially in light of some of the recent disappointing economic data."

2:41 p.m. ET, August 18, 2021

Fed minutes: Tapering could start later this year

From CNN Business' Anneken Tappe

The Federal Reserve may start tapering its billions of dollars of monthly asset purchases later this year, the central bank's most recent meeting minutes showed.

"Various participants commented that economic and financial conditions would likely warrant a reduction in coming months. Several others indicated, however, that a reduction in the pace of asset purchases was more likely to become appropriate early next year," the minutes from the July 27-28 meeting read.

At present, the Fed buys Treasury securities worth $80 billion and mortgage-backed securities worth $40 billion every month. But as the economy recovers, this spending spree stands to end.

With inflation spiking as the nation emerges from the worst of the pandemic and unemployment numbers going down, many experts believe the conditions warranting a tapering are rapidly approaching.

1:18 p.m. ET, August 18, 2021

Worried about market volatility? Get used to it

From CNN Business' Anneken Tappe

The stock market has a nervous energy about it. There's so much to worry about: Delta, the state of the recovery, when the Federal Reserve will start tapering....

Among investors' worries is that a cyclical slowdown is lurking beneath the recovery, said Brian Belski, BMO Capital Markets' chief investment strategist.

Sentiment is important for the market, as well as the economy, and worries about a slowdown are increasing. This could mean a Fed that's playing defense.

But it's also why Belski expects a volatile and fear-driven market to persist into 2022.

"I don't think people really understand what tapering is," he mused, adding that many funds have underperformed because they tried to time the market during a period of high uncertainty.

The process would be this: first the Fed would stop buying assets, then it would wind down its holdings and then it would start selling assets.

For him, it's still obvious where to put your money:

"US stocks are the best assets in the world, stay invested here, we have the best companies... that will continue to provide the best results," he said on the CNN Business digital live show Markets Now.

1:12 p.m. ET, August 18, 2021

Making money off the streaming boom

CNN Business' Anneken Tappe

The way we consume TV shows and movies has changed hugely over the past few years, and the pandemic gave this transition yet another boost.

Six-year-old service FUBO TV (FUBO) is benefiting from the stay-at-home-fueled appetite for streaming: Its subscribers grew 138% over the year to almost 682,000, blowing past analyst expectations.

CEO David Gandler said Fubo is positioned as a sports-first TV replacement service. "Sports is our key," he told Alison Kosik on the CNN Business digital live show Markets Now.

The company is not yet profitable, but Gandler noted that in a subscription model, the more invested in content up front, the more the service will benefit long-term.

But to be in the black, "we've got some time to go," he said,

1:03 p.m. ET, August 18, 2021

There's a slowdown beneath the economic recovery

CNN Business' Anneken Tappe

The economy is still bouncing back strong from the pandemic recession. That much is undeniable.

Even though there's plenty more room to grow, America's electric growth could start to slow down soon, said Lakshman Achuthan, co-founder of the Economic Cycle Research Institute.

"While the US recovery has been absolutely record-breaking from the lows, don't get used to it," Achuthan said on the CNN Business' digital live show Markets Now.

"Coming out of a deep recession the economy is like a coiled spring. It just bounces," he added.

But no longer.

The Covid resurgence from the Delta variant isn't the only reason for the upcoming slowdown, he noted. The sugar rush from stimulus is wearing off, and growth rates for various economic indicators have already peaked and are coming back down, Achuthan said.

So does that mean a recession is in sight? No.

But "when the dust settles you've got this slowdown that is set to persist as far as we can tell," he said.

12:02 p.m. ET, August 18, 2021

Waiting for the Fed

From CNN Business' Anneken Tappe

Investors are twiddling their thumbs a bit today, waiting patiently for the Federal Reserve's meeting minutes that are due to be released at 2pm ET.

After a brief foray into positive territory, stocks are slightly lower around midday.

The Dow is 0.1%, or 27 points lower, and the S&P 500 is also down 0.1%. The Nasdaq Composite is more or less flat.

So what's the deal with the minutes? Investors are hoping for more insight into how the Fed is thinking about tapering its asset purchases.

So far, we've gotten Fed Chairman Jerome Powell to admit that the central bank is now "talking about talking about it." But nothing more concrete has been said.

“While we’re not likely to get any solid answers on the Fed’s next move until its Jackson Hole symposium next week, the market seems more certain that tapering is on the way despite the recent bad string of data,” said TD Ameritrade Chief Market Strategist JJ Kinahan.

Others are less sure we'll get answers today.

"Given how much Fed commentary we've had over the last couple of weeks, I struggle to see the minutes offering much of value for the markets," said Craig Erlam, senior market analyst at OANDA Europe in a note to clients. "Even the most dovish members of the Fed have come around to the idea of tapering this year."

Stay tuned for 2 pm.

10:55 a.m. ET, August 18, 2021

Stocks recover

From CNN Business' Anneken Tappe

Maybe we spoke too soon and it won't be another day of losses?

An hour into the trading day, there are green arrows on the board and the Dow is flat.

The S&P 500 and the Nasdaq Composite are both up 0.1%.

Still, the market has pulled back following a five-day streak of all-time highs that ended Monday.

9:53 a.m. ET, August 18, 2021

Stocks open lower

From CNN Business' Anneken Tappe

People walk by the New York Stock Exchange on August 10, 2021 in New York City. 
People walk by the New York Stock Exchange on August 10, 2021 in New York City. 

US stocks kicked off in the red Wednesday, adding onto their losses from Tuesday.

In economic news, housing data was broadly in line with expectations, with housing starts pulling back slightly.