Markets React to Fed Signals: Stocks Slide, Dollar Gains

Stocks fell and the dollar gained following Federal Reserve minutes indicating potential interest rate cuts. The Dow, S&P 500, and Nasdaq Composite all saw declines. Data showed the U.S. labor market cooling, business activity hitting a four-month low, and challenges in passing higher prices to consumers.

Stocks fell and the dollar gained on Thursday after the Federal Reserve minutes indicated that U.S. interest rate cuts were likely. The Dow Jones Industrial Average dropped 0.45%, the S&P 500 fell 0.63%, and the Nasdaq Composite lost 1.13%.

The Fed minutes released Wednesday revealed a consensus among policymakers favoring a rate cut if data met expectations. Fresh data showed an uptick in unemployment benefit applications while U.S. business activity fell to a four-month low, signaling possible prolonged inflation trends.

European shares rose 0.36%, buoyed by unexpectedly strong business activity data, while oil prices recovered after a recent slide. The dollar rebounded ahead of Federal Reserve Chair Jerome Powell's upcoming speech, and euro zone bond yields increased following positive survey data in the services sector.

(With inputs from agencies.)