MW U.S. stocks rise after Fed minutes show most officials expect slower pace of rate hikes 'would soon be appropriate'
By Isabel Wang and Frances Yue
U.S. stock indexes extended gains on Wednesday afternoon after the latest minutes of the Federal Open Market Committee meeting showed most policy makers expect a slower pace of rate hikes will "soon be appropriate", but they were uncertain how high the benchmark interest rate will rise.
How are stock indexes trading?
Stocks finished higher on Tuesday, with the S&P 500 closing up 53.64 points, or 1.4%, to 4,003.58, the Dow industrials gaining 397.82 points, or 1.2%, to close at 34,098.10. The Nasdaq Composite advanced 149.89 points, or 1.4%, to close at 11,174.40.
What's driving markets?
November's Federal Reserve meeting minutes revealed that it would soon be time to slow the pace of interest-rate increases, but FOMC officials were still unsure how much further the benchmark rate will go up. The Fed hiked its benchmark rate by 75 basis points to a range of 3.75% to 4% at its meeting earlier this month.
The Fed's staff for the first time said a recession will be possible in the next year with some saying there is an increasing risk that the Fed's actions "would exceed what was required" to bring inflation down to acceptable levels, according to the minutes.
U.S. Treasury yields and the U.S. dollar index fell after the minutes were published.
Earlier, in U.S. economic data, U.S. durable-goods orders rose 1% in October while jobless benefit claims rose 17,000 to 240,000 in the latest week, the highest level since August.
Meanwhile, the S&P Global flash U.S. services purchasing managers indexes in November dropped to 46.1 from 47.8. S&P Global flash U.S. manufacturing purchasing managers indexes in November fell to 47.6 from 50.7. Any number below 50 reflects a contracting economy. The University of Michigan's final November consumer sentiment index fell in November to 56.8 and remained depressed, reflecting concerns about high inflation and the increasing possibility of a recession.
U.S. new home sales advanced 7.5% to a seasonally-adjusted annual rate of 632,000 in October from a revised 588,000 in the prior month, the Commerce Department reported Wednesday.
"Whether or not sales stabilize at this pace remains to be seen, but this could be an early indicator of the housing market bottoming out at least as far as the pace of sales go," said Isfar Munir, an economist at Citigroup in New York. "New home sales are only 10% of housing sales in the U.S. though, and we cannot draw this conclusion until existing home sales also show more evidence of stabilizing."
U.S. stock exchanges will be closed for Thanksgiving Day on Thursday, Nov. 24, and reopen the next day only for a shortened session on Black Friday, the annual end-of-year shopping event, with trading ending at 1 p.m. Eastern on Nov. 25.
Read: This isn't a 'close your eyes and buy anything' kind of market
Bond yields were holding steady, with that of the 10-year Treasury note trading around 3.728% and the 2-year at 4.505%.
The spread between 2- and 10-year Treasury yields ended Tuesday's session at minus 76 basis points, the most inverted since Oct. 5, 1981, which some say points to an inevitable recession.
Elsewhere, oil prices were modestly lower, while natural-gas futures climbed 8% to $7.982 per million British thermal units, with European natural-gas futures also surging after Russian energy giant Gazprom threatened to cut deliveries through a Ukraine pipeline to Europe. Markets are also waiting on news of an agreement between the U.S. and its allies over a price cap on Russian oil.
Companies in focus
-- Barbara Kollmeyer contributed to this article
-Isabel Wang
(END) Dow Jones Newswires
November 23, 2022 14:24 ET (19:24 GMT)
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