FOMC minutes decidedly hawkish, DOW retreats but stays bullish

US stocks ended lower overnight as minutes from the latest FOMC meeting revealed a more hawkish stance than anticipated. The central focus of the minutes was the “lack of further progress” in reducing inflation towards the 2% target, which has raised fresh concerns about the persistence of inflation.

Additionally, the minutes highlighted recent monthly data showing “significant increases in components of both goods and services price inflation,” adding to the urgency of the situation. More importantly, “various participants mentioned a willingness to tighten policy further should risks to inflation materialize in a way that such an action became appropriate.”

Despite the hawkish tone of the minutes, it’s important to note that several influential figures, including Chair Jerome Powell and Governor Christopher Waller, have since indicated that they doubt the next move will be an interest rate hike.

Technically, as long as 39371.92 support holds, further rally is expected in DOW in the near term. Current rise is part of the larger uptrend and should target 61.8% projection of 32327.20 to 39889.05 from 37611.56 at 42284.78. However, break of 39371.92 will bring lengthier consolidations first before the up trend resumes.