The minutes of the Federal Reserve's most recent meeting confirmed the market's view that bigger rate rises are coming in order to cool down inflationary pressures.
The S&P 500 and the Dow Jones fell in volatile trade, dipping by 0.2% and 0.1%, respectively. The minutes from the central bank show that they will stick to their aggressive interest rate hikes in the near term.
The minutes of the Federal Open Market Committee show US policy makers unanimously agreed to move the stance of monetary policy toward a neutral stance. In June and July, it signaled rate hikes of 50 basis points.
Markets are comfortable with the idea of more rate rises in June and July, along with discussions about moving rates beyond neutral to help control inflation. Michael Hewson, chief strategist at CMC Markets, said, "None of this is new, but it's also not particularly enlightening given that not one FOMC member has the same measure of where the neutral rate actually is."
Concerns over the impact of inflation on the economy have prompted investors to seek safer havens for their cash, as stocks have been in retreat for most of this year. Target and Walmart have painted a gloomy picture of the economy in their quarterly earnings.
Some retailers have not been downbeat. On Wednesday, the luxury apparel retailer reported upbeat results and raised its outlook.
Russia slashed interest rates on Thursday in an attempt to rein in the ruble's strength, which will only make the sanctions-hit economy worse.
The dollar was steady around one-month lows, while the 10-year Treasury note's yield fell after Fed policy makers said there may be a degree of flexibility in the tightening of its monetary policy.
Natural gas futures in the US fell on Thursday after having risen to $9 per million British thermal units, their highest since 2008. In addition to gasoline prices soaring, this is adding to inflationary pressures rippling across the US.
In Asia, Chinese stocks rose modestly after Chinese premier Li Kequiang said the slowing in the country's economy was worse than previously thought.
The CSI 300 rose while the Shanghai Composite fell. The Hang Seng and the Nikkei fell.
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