Wall St gains after Fed minutes confirm inflation focus

  • Stocks fall ground after Fed minutes
  • Job openings are less than expected
  • Dow down 0.12%, S&P up 0.21%, Nasdaq up 0.06%

Jan 4 (Reuters) – The S&P 500 pared some gains in volatile trade on Wednesday after minutes of the Federal Reserve’s last meeting showed officials agreed to slow the pace of interest rate hikes, yet they focused on controlling inflation.

Officials at the Fed’s December 13-14 policy meeting agreed that the US central bank should continue to raise the cost of debt to moderate the pace of price increases, but gradually with the aim of limiting risks to economic growth. To do.

Investors were combing through the central bank’s internal deliberations for clues about its future path. After the meeting, Chairman Jerome Powell said more hikes were needed and investors took a harsher tone than had been expected then.

“It’s a broken record; every time the Fed hints at higher rates or confirms higher rates, the market sells off,” said Jake Dollarhide, chief executive officer of Longbow Asset Management in Tulsa, Oklahoma.

“This market wants to go up, but it needs some good news at some point. Investors are reacting to the past and ignoring the present. (Minneapolis Fed President Neal) Kashkari’s comments were good news today. He was dovish, and he is typically hawkish.”

As of 2:34 p.m. EST, the Dow Jones Industrial Average (.DJI) was down 39.99 points, or 0.12%, at 33,096.38; The S&P 500 (.SPX) rose 8.1 points, or 0.21%, to 3,832.24; And the Nasdaq Composite (.IXIC) rose 5.71 points, or 0.06%, to 10,392.70.

S&P’s Rate-Sensitive Technology Index (.SPLRCT) lost ground after a few minutes and was down 0.4%. Even the bank sector (.SPXBK), which is likely to benefit from higher rates, lost some ground after minutes but was still up 1.5% on the day.

Earlier in the day, data showed US job openings rose in November indicating a tight labor market, prompting the Fed to prolong its monetary tightening campaign, while other data showed manufacturing expanded more in December. shown contracted.

The Minneapolis Fed’s Kashkari stressed the need for continued rate hikes on Wednesday, setting his own forecast that the policy rate should be initially held at 5.4%.

US equities were hammered into 2022 on recession concerns as aggressive monetary policy tightens, with the three main stock indexes logging their biggest annual losses since 2008.

Market participants see a 66.7% chance of a 25 basis point rate hike by the Fed in February, and a 4.98% increase in rates by June.

Advancing issues declined in the ratio of 3.90-to-1 on the NYSE; On the Nasdaq, the 2.43-to-1 ratio was in favor of the advancers.

The S&P 500 posted three new 52-week highs and no new lows; The Nasdaq Composite recorded 75 new highs and 46 new lows.

Reporting by Sinead Carew in New York, Shubham Batra in Bengaluru, Amrita Khandekar and Ankika Biswas; Editing by Shaunak Dasgupta and Jonathan Oatis

Our Standards: The Thomson Reuters Trust Principles.

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