Stocks rise after Fed minutes signal rate hike slowdown

Stocks rose on Wednesday after the minutes from the Federal Reserve’s latest policy meeting signaled a likely slowdown in the central bank’s pace of interest rate increases next month. When the closing bell rang on Wall Street, all three major indexes were in green figures, with the S&P 500 up 0.6%, the Dow up 0.3%, and the Nasdaq higher by 1%. Wednesday marked the week’s final full trading session for U.S. investors. U.S. markets will be closed for Thanksgiving, and markets are open for just a half day on Black Friday. The biggest move in markets on Wednesday came from the energy markets, with the price of WTI crude oil falling 4.3% to settle at $77.47 a barrel. Crude oil prices fell as low as $77.10 during the day, nearing the year’s lows. Markets reacted on Wednesday afternoon to language from the Fed suggesting a “number of participants” said it would “become appropriate to slow the pace of increase in the target range for the federal funds rate.” Last month, the Fed raised the target range for its benchmark interest rate by 0.75% for the fourth-straight meeting. Markets expect a 0.50% increase in this range at the Fed’s meeting next month. Elsewhere on the calendar, Wednesday served as a busy day for economic data, with reads on the labor market, housing market, and manufacturing sector all out early Wednesday. The latest data on weekly jobless claims showed 240,000 new filings for unemployment insurance were made 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 for a 0.4% increase, according to data from Bloomberg. S&P Global’s preliminary read on business activity in November showed a continued slowdown in economic output, with the firm’s manufacturing PMI falling to a 30-month low, while service sector activity hit a three-month low. S&P Global Market Intelligence chief business economist Chris Williamson said Wednesday these reports are consistent with an economy contracting at an annualized rate of 1%. Consumer sentiment data from the University of Michigan showed consumers remain downbeat about their prospects, with the index falling 5% from October to a reading of 56.8, down from 59.9. “Along with the ongoing impact of inflation, consumer attitudes have also been weighed down by rising borrowing costs, declining asset values, and weakening labor market expectations,” said Joanne Hsu, director of the survey of consumers. On the housing front, new home sales unexpectedly increased in October, rising 7.5% to an annualized rate of 632,000, much faster than the 570,000 annualized rate expected by economists. Mortgage rates also dipped slightly this week, remaining below recent highs.

Recent stock momentum 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, Wednesday saw investors continue to build on that positive momentum. Over the last 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 the collapse of crypto markets weigh on the broader tech industry. Still, recent market action has some strategists growing more bullish toward the year’s end, even as 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,” BMO Capital Markets’ chief investment strategist Brian Belski told Yahoo Finance Live on Tuesday. “I think the market is going to continue to…climb higher. I do really think that there’s a good shot that we’re going to be well above 4,000 [on the S&P 500] at year-end.” Belski has a year-end price target of 4,300 on the S&P 500, which implies the index could gain another 8% or so through the end of this year. In crypto markets, the fallout from the collapse of FTX continues to reverberate through the industry, though the price of bitcoin was up 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 would be appearing at the New York Times’ Dealbook conference next Wednesday, his first public appearance since the firm spiraled into bankruptcy earlier this month. On Tuesday, Digital Currency Group, the parent company of troubled 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 redemptions and new activity on Genesis last week resulted from a “liquidity and duration mismatch in the Genesis loan book.” Silbert disclosed there were intercompany loans made between DCG and Genesis, but argued these loans were made “in the same vein as hundreds of crypto investment firms.” On the earnings side, results Wednesday morning from Deere & Co. (DE) sent shares higher by 5% with the agricultural giant reporting profits that topped expectations. Other movers early Wednesday included names that released 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 reduce its workforce by up to 12%, or by 6,000 jobs, by the end of its fiscal 2025 in response to a slowdown in the PC market. Nordstrom shares fell 4% on Wednesday after reporting a sales decline in its most recent quarter and forecasting lower profits for the full year. Autodesk shares lost over 5.5% after the company cut its outlook for billings and cash flow this year, citing “less demand for multi-year, up-front and more demand for annual contracts than we expected.”