Updated at 11:55 am EST
U.S. stocks moved modestly higher Wednesday, following on from last night’s rally that lifted stocks to the highest levels in more than two months, as investors looked to the release of minutes from the Fed’s November policy meeting before the Thanksgiving holiday lull.
Markets were given a further boost from a better-than-expected reading of consumer confidence from the University of Michigan’s benchmark survey, as well as a surprise increase in single-family home sales over the month of October.
Another overnight surge in China’s Covid infection rate, alongside its spread to other major cities in the world’s second-largest economy, has failed to dent investor sentiment his week as investors sell the U.S. dollar and move cautiously into riskier assets heading into the final weeks of the year.
Today’s Fed minutes, which will detail discussions of its November policy meeting, could alter that move, but market consensus appears to suggest that traders expect an easing of the central bank’s tightening stance as inflation recedes and the economy slows.
Markets were left in confusion in early November after the Fed lifted its benchmark interest rate by 0.75% to a range of between 3.75% and 4% and hinted that future hikes would take into account their ‘cumulative’ impact on the broader domestic economy.
Fed Chairman Jerome Powell quickly tamped-down expectations of smaller rate hikes, or indeed a lower terminal rate, however when he told reporters that it was “premature” to consider a pause in future hikes, adding that “”if you under-tighten, it is a year or two down the road you realize you haven’t got inflation under control.”
The minutes, which are set to be released at 2:00 pm Eastern time, could shed light on any difference in opinion from Fed officials on the Open Markets Committee, which ultimately decides interest rate policy, and how that might influence the central bank’s upcoming meeting in December.
The U.S. dollar index, which tracks the greenback against a basket of its global peers, was marked 0.65% lower in early New York trading at 106.537 after data showed weekly jobless claims rose by 17,000, to an April high of 240,000, over the period ending on November 19.
The dollar’s overnight move was was tempered by a bigger-than-expected rate hike from the central bank of New Zealand, which took its benchmark rate to a 14-year high of 4.25%.
Treasury yields were also on the move, and flashing further warning signs of a near-term recession, as benchmark 2-year notes eased to 4.475% following the jobless claims and consumer confidence data while 10-year paper bumped to 3.766%
The gap between 1 month Treasury bills, and 30-year bonds, widened to 5.6 basis points, a move that puts the entire Treasury complex into inversion for only the second time in three years.
That said, the Atlanta Fed’s GDPNow forecasting tool suggests fourth quarter growth is advancing at a 4.2%, a level that’s likely to rise following today’s better-than-expected data on durable goods orders.
Oil prices were on the move as well, with WTI futures for January delivery falling $2.97 to $77.98 per barrel amid reports that the European Union is considering a cap on the sale of Russian crude of between $65 and $70 per barrel. China’s Covid crisis is also upending demand bets as lockdowns are likely to accelerate heading into the winter months.
Heading into the middle of the trading day on Wall Street, the S&P 500, which is now up 3.4% for the month and closed above the 4,100 point level for the first time since early September, added 5 points while the Dow Jones Industrial Average was up 15 points. The tech-heavy Nasdaq is priced was up 35 points thanks in part to a big early-market move in Tesla (TSLA) – Get Free Report.
Shares in the group jumped 5.3% after analysts at Citigroup lifted their rating on the clean-energy carmaker while Morgan Stanley noted that the stock’s $500 billion slump maybe coming to an end.
Apple (AAPL) – Get Free Report shares, however, were marked only 0.56% higher following reports of protests by workers over pay and conditions at its key iPhone factory in China and ongoing supply-chain challenges linked to Beijing’s strict Covid policies.
Shares in Nordstrom (JWN) – Get Free Report slumped 7.8% after the retailer posted better-than-expected third quarter earnings but trimmed its profit outlook for its full financial year amid slower early-holiday spending and ongoing supply chain inflation.
Deere & Co (DE) – Get Free Report surged 7.3% after stronger-than-expected fourth quarter earnings and a robust-near term outlook as the heavy equipment maker continues to capitalize on surging farm demand and firming prices.
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