Another FOMC Minutes Pullback?

For the fourth time this year, investors didn’t react well to the FOMC minutes being released.

Stocks fell following today’s unveiling of the minutes from the latest Federal Open Market Committee meeting. That’s nothing new. The previous three meeting minutes released this year also prompted a market pullback.

Here’s what happened to the S&P 500 the last three times the FOMC minutes were released:

• February: Fell 3% in four trading days.
• April: Fell 3.3% in five trading days.
• May: Fell 3.7% in 10 trading days.

Based on that data, perhaps we should expect a pullback in the order of 3-3.5% over the next week or so. If it happens, don’t panic. After each of the first three post-FOMC pullbacks, the market regained all its losses within a couple weeks.

With second-quarter earnings season underway, that should be enough to distract investors from the side show that is QE3. The Fed can’t buy back $85 billion in bonds forever. It was only a matter of time before they started to “taper”. And really, tapering is a good thing since it will mean the U.S. economy has stabilized – or at least patched itself back together.

Corporate earnings are what matter. Those have doubled since the nadir of the recession in 2009, and so has the S&P. Should earnings continue to grow, they’re more likely to influence the market than the Fed’s temporary stimulus effort.