US stocks drop as traders take in Fed minutes and reassess rate outlook

• US stocks fell Wednesday as investors digested the Fed's last meeting minutes.

• Central bankers emphasized their 2% inflation goal, striking a slightly more hawkish tone.

• Still, investors are anticipating a handful of rate cuts in 2024.

US stocks fell on Wednesday as traders took in the Federal Reserve's December meeting minutes and reassessed their views on coming interest rate cuts in 2024.

The major indexes ticked lower, though stocks pared their deepest losses of the session. Investors digested the minutes from the Fed's December FOMC meeting, where central bankers struck a mildly hawkish tone on the US economic outlook. Officials emphasized their commitment to returning inflation back to 2%, suggesting rates could remain higher-for-longer than markets are expecting.

"In light of the policy restraint in place, along with more favorable data on inflation, participants generally viewed risks to inflation and employment as moving toward greater balance," central bankers said, adding that the Fed remained "highly attentive to inflation risks."

Investors, though, still expect the Fed to enact rate cuts this year. Markets are pricing in a 33% chance rates will fall past 3.75% by the end of the year, up from just a 15% chance priced in a month ago, according to the CME FedWatch tool.

The 10-year Treasury yield fell by about four basis points in the afternoon, to 3.903%.

"Minutes from the December FOMC meeting are slightly hawkish but not enough to spook markets," LPL Financial Chief Economist Jeffrey Roach said in a statement Wednesday.

Here's where US indexes stood at the 4:00pm closing bell on Wednesday: 

• S&P 500: 4,704.81, down 0.8%

• Dow Jones Industrial Average: 37,430.19, down 0.76% (-284.85 points)

• Nasdaq Composite: 14,592.21, down 1.18%

Here's what else happened today: 

• The US national debt topped $34 trillion for the first time.

• Investors are overrating a Goldilocks scenario and shouldn't expect interest rate cuts anytime soon.

• The SEC is likely to reject a spot bitcoin ETF and will send prices crashing as much as 20%, one crypto firm says.

• Oil prices could jump 15% on unavoidable disruptions in the Middle East, according to one energy expert.

• CHART OF THE DAY: The Magnificent Seven stocks are now equal to the combined stock markets of three first-world nations.

• AI will boom to a $225 billion market by 2027, UBS estimates.

• Investors are "too fricking happy" and markets could soon slump, according to "Big Short" star Steve Eisman.

In commodities, bonds, and crypto: 

• Oil prices spiked. West Texas Intermediate crude oil jumped 3.8% to $73.08 a barrel. Brent crude, the international benchmark, edged up 3.5% to $78.57 a barrel.

• Gold ticked lower 1.1% to $2,049.80 per ounce.

• The 10-year Treasury yield fell four basis points to 3.903%.

• Bitcoin tumbled 5% to $42,752.

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