What Markets Are Doing After Today's FOMC Meeting Minutes Release

The three major indexes all dropped in unison shortly after the release of the minutes from the U.S. Federal Reserve's July Federal Open Market Committee (FOMC) meeting, reflecting Fed sentiment that accommodative monetary policy could end sooner than expected if improvements continue in the labor market

At 2:15 p.m. EDT, the S&P 500 dropped 4.13 points, the Dow Jones Industrial Average lost 32.99 points, and the Nasdaq fell 7.66 points, all before the three major indexes began to rise again.

While the Fed made no remarks on an explicit timetable for interest rate hikes, which is what the markets are observing attentively, the minutes did indicate that the situation in the labor market was looking healthier and improving quicker than expected.

The minutes also showed that many FOMC members said "it might become appropriate to begin removing monetary policy accommodation sooner than they currently anticipated" if the economic conditions they monitor begin to converge on their targets.

There also seemed to be language to suggest that inflation would begin to pick up without being derailed by disinflation, as "most now judged that the downside risks to inflation had diminished," as well as many members believing "risks of inflation running persistently below their objective as having diminished somewhat."

Here's what the Fed's agenda will be for the rest of the year...

The Fed's Charted Course for Monetary Policy

As the Fed's playbook stands now, there will be a $25 billion monthly purchase of agency mortgage-backed securities (MBS) and long-term treasuries until the September meeting, when that number will be tapered to $15 billion. And, as minutes from June's meetings suggest, that last $15 billion will be cut and the policy of quantitative easing will end after the meeting on October 29.

The policy of bond buying began in September 2012 as a way to put downward pressure on long-term interest rates and pour more money into the markets at a time when the U.S. economy needed a quick boost amid a slow-growing, post-recessionary period. It began as a monthly purchase of $45 billion in treasuries, and $40 billion in agency MBS, for a total of $85 billion in total asset purchases.