Stock markets rose after Fed minutes signaled a slowdown in rate hikes

Shares soared Wednesday after the minutes of the Federal Reserve’s latest policy meeting signaled a likely slowdown in the pace of central bank interest rate hikes next month.

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

Wednesday marked the last full trading session of the week for US investors. The US markets will be closed for Thanksgiving and the markets will only be 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 trade at $77.47 a barrel. Crude oil prices fell as low as $77.10 during the day, approaching their lows for the year.

Markets reacted to the Fed’s language Wednesday afternoon by suggesting that a “number of participants” said it would “become appropriate to slow the pace of hikes in the target range for the federal funds rate.”

Last month, the Fed raised the target range for its key interest rate to 0.75% for the fourth consecutive meeting. Markets expect a 0.50% hike in this range at next month’s Fed meeting.

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

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

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

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

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

On the housing front, new home sales unexpectedly rose in October, rising 7.5% to an annual rate of 632,000, much faster than the 570,000 annual rate economists expected. Mortgage rates are also down slightly this week, staying below their recent highs.

The recent momentum in equities continues

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

Over the past month, the Dow is up nearly 10%, while the S&P 500 is up more than 6.5%. The tech-heavy Nasdaq continues to lag, rising less than 3% over that period as higher rates and collapsing cryptocurrency markets weigh on the broader tech sector.

However, the recent market action has caused some strategists to turn more bullish towards the end of the year, even as the high-profile teams at Morgan Stanley and Goldman Sachs issued more cautious outlooks for the stock market this week.

“The market is like a coiled spring,” Brian Belski, chief investment strategist at BMO Capital Markets he told Yahoo Finance Live on Tuesday. “I think the market will continue to…go higher. I really think there is a good chance that we will 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 that the index could gain another 8% or so through the end of this year.

In the cryptocurrency markets, the aftermath of the FTX crash continues to reverberate across the industry, even as the price of bitcoin surged by a few percentage points on Wednesday to trade near $16,500. Late Wednesday afternoon, disgraced FTX founder and former CEO, Sam Bankman-Fried She said he would appear at the New York Times Dealbook conference next Wednesday, his first public appearance since the company went bankrupt earlier this month.

Digital Currency Group, the parent company of troubled exchange Genesis Global, became the latest major cryptocurrency player to go short on Tuesday and reassure investors that a bankruptcy filing was not imminent.

In a note to DCG employees, CEO Barry Silbert said the decision to halt redemptions and new business on Genesis last week resulted from a “liquidity and maturity mismatch in Genesis’ loan book.”

Silbert revealed that there were intercompany loans made between DCG and Genesis, but argued that these loans were made “in the same spirit as hundreds of cryptocurrency investment firms.”

On the earnings side, results from Deere & Co. (DE) sent shares 5% higher on Wednesday morning as the agricultural giant reported profits that beat expectations.

John Deere tractor is seen during a tractor race called ‘Traktoryja’ organized 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 early Wednesday included names that released results after the market closed on Tuesday, including HP (HPQ), Nordstrom (JWN) and Autodesk (ADSK).

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

Nordstrom shares fell 4% Wednesday after reporting declining sales in the most recent quarter and forecasting lower profits for the full year.

Autodesk shares have lost more than 5.5% after the company trimmed its billing and cash flow outlook this year, citing “less demand for multi-year, upfront contracts and more demand for annual contracts than we expected” .

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