Stocks rise after Fed minutes signal slowing rate hike

Stocks rise after Fed minutes signal slowing rate hike

Stocks rose on Wednesday after minutes from the Federal Reserve’s latest policy meeting signaled a likely slowing in the pace of the central bank’s interest rate hikes next month.

When the closing bell rang on Wall Street, all three major indexes were in green numbers, with the S&P 500 up 0.6%, the Dow Jones up 0.3% and the Nasdaq up 1% .

Wednesday marked the last full trading session of the week for US investors. US markets will be closed for Thanksgiving and markets are only open for half a day on Black Friday.

The biggest move in markets on Wednesday came from energy markets, with the price of WTI crude oil falling 4.3% to $77.47 a barrel. Crude oil prices fell to $77.10 during the day, nearing lows for the year.

Markets reacted on Wednesday afternoon to language from the Fed suggesting that “a number of participants” said it “would become appropriate to slow the pace of increase in the target range for the fed funds rate.”

Last month, the Fed raised the target range for its benchmark interest rate by 0.75% for the fourth consecutive meeting. Markets are expecting a 0.50% rise in that range at the Fed meeting next month.

Elsewhere on the calendar, Wednesday was a busy day for economic data, with readings in the labor market, housing market and manufacturing sector early Wednesday.

The latest weekly jobless claims data showed 240,000 new jobless claims were filed last week, the most since mid-August. Economists expected initial claims to total 225,000 for the week ending November 19.

Durable goods orders for October were also released early Wednesday, showing orders rose 1% last month against expectations of a 0.4% increase, according to Bloomberg data.

S&P Global’s preliminary reading of business activity in November showed a continued slowdown in economic output, with the company’s manufacturing PMI falling to a 30-month low, while service sector activity rose. hit a three-month low. S&P Global Market Intelligence chief economist Chris Williamson said Wednesday the reports were consistent with the economy contracting at an annualized rate of 1%.

Consumer sentiment data from the University of Michigan showed consumers remain optimistic about their outlook, with the index falling 5% from October to 56.8 from 59.9. “In addition to the continued impact of inflation, consumer attitudes have also been weighed down by rising borrowing costs, falling asset values ​​and weakening labor market expectations,” he said. said Joanne Hsu, consumer survey director.

On the housing front, new home sales rose unexpectedly in October, rising 7.5% to an annualized rate of 632,000, much faster than the 570,000 annualized rate forecast by economists. Mortgage rates also eased slightly this week, remaining below recent highs.

Recent stock market momentum continues

After the S&P 500 closed above 4,000 on Tuesday for the first time in two months and the Dow Jones closed at a three-month high on Wednesday, investors continued to build on that positive momentum.

Over the past month, the Dow Jones has risen almost 10%, while the S&P 500 has risen more than 6.5%. The tech-heavy Nasdaq continues to lag, rising less than 3% over the period, as rising rates and crashing crypto markets weigh on the broader tech industry.

Still, recent market action has caused some strategists to become more optimistic towards the end of the year, even as top teams at Morgan Stanley and Goldman Sachs released more cautious outlooks for the stock market this week. .

“The market is like a coil spring,” said Brian Belski, chief investment strategist at BMO Capital Markets. said Yahoo Finance Live on Tuesday. “I think the market is going to continue to…go higher. I really think there’s a good shot that we’re going to be well above 4,000 [on the S&P 500] at the end of the year.”

Belski has a year-end price target of 4,300 on the S&P 500, implying the index could gain another around 8% through the end of this year.

In crypto markets, the fallout from FTX’s collapse continues to ripple through the industry, although the price of bitcoin rose a few percentage points on Wednesday to trade near $16,500. Late Wednesday afternoon, disgraced FTX founder and former CEO Sam Bankman-Fried said he will appear at the New York Times Dealbook conference next Wednesday, his first public appearance since the company went bankrupt earlier this month.

On Tuesday, Digital Currency Group, the parent company of struggling exchange Genesis Global, became the latest major crypto player to come out and reassure investors that a bankruptcy filing was not imminent.

In a memo to DCG employees, CEO Barry Silbert said the decision to halt buyouts and new business on Genesis last week resulted from a “liquidity and duration mismatch in Genesis’ loan portfolio.” .

Silbert revealed that there were intercompany loans made between DCG and Genesis, but argued that these loans were made β€œin the same vein as hundreds of crypto investment firms.”

On the earnings side, Wednesday morning’s results from Deere & Co. (DE) sent shares up 5% as the agricultural giant reported earnings above expectations.

John Deere tractor is seen during a tractor race called 'Traktoryja' held as part of the traditional Dozhinki harvest festival.  Gieraltowice, Wadowice County in Poland, August 28, 2022. Participants raced in five different classes based on the engine power of a tractor.  For the first time, women took part in the race.  (Photo by Beata Zawrzel/NurPhoto via Getty Images)

John Deere tractor is seen during a tractor race called ‘Traktoryja’ held as part of the traditional Dozhinki harvest festival. Gieraltowice, Wadowice County in Poland on August 28, 2022. (Photo by Beata Zawrzel/NurPhoto via Getty Images)

Other movers on Wednesday morning included names that reported results after Tuesday’s market close, including HP (HPQ), Nordstrom (JWN) and Autodesk (ADSK).

HP shares gained 1.8% on Wednesday after the company announced plans to cut its workforce by up to 12%, or 6,000 jobs, by the end of its 2025 fiscal year in response to a market slowdown PCs.

Nordstrom shares fell 4% on Wednesday after reporting weaker sales in its latest quarter and forecasting weaker profits for the full year.

Autodesk shares shed more than 5.5% after the company slashed its billing and cash flow outlook this year, citing “less demand for multi-year contracts up front and more demand for annual contracts than expected”.

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