Will The Fed Derail This Rally?

The S&P 500’s summer rally has continued this week with the index setting yet another all-time high on Monday. However, the S&P pulled back a bit in Tuesday’s session ahead of Wednesday’s release of the Federal Reserve July meeting minutes.

Could the Fed ultimately be what kills the 2016 market rally?

Fears that a disappointing Q2 earnings season would be the rally’s demise have so far proven to be misplaced. Earnings numbers have been mixed but mostly solid, and the market has marched higher. Sellers seem to be hard to find in this low-rate environment, and the rare market dips this summer have happened on relatively low volume.

Related Link: Argus Positive On Stocks For The Remainder Of 2016, But BTIG Warns Of A Pullback

At this point, few economists and investors are predicting a rate hike in September. A new Wall Street Journal poll of 62 economists found that 71 percent of them expect the next rate hike to come in December. However, investors will be looking for any signs of hawkish language in the July minutes that might suggest a more imminent move.

High yielding stocks Verizon Communications Inc. VZ and AT&T Inc. T have pulled back further from their 2016 highs this week, indicating that investors may be worried that yield-chasers will soon have an opportunity to rotate out of dividend stocks and into bonds.