US Manufacturing Drops to 2.5-Year Low, Lifting Stocks as Federal Reserve Possibly Close to Policy Goal

Most US stocks rose as a closely monitored manufacturing gauge slumped to a two-and-a-half-year low ahead of meeting minutes from the Federal Reserve that are likely to shed more light on the path of interest rates.

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The Nasdaq Composite climbed 0.4% to 11,216.7 and the S&P 500 edged up 0.1% to 4,009.5 after midday on Wednesday. The Dow Jones Industrial Average was little changed at 34,088.6. Consumer discretionary and technology were among the biggest gainers, while energy was the steepest decliner intraday.

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The US 10-year yield fell 2.8 basis points to 3.73%.

“The highlight of today will be the release of the Federal Open Market Committee minutes for November, with commentary on the pace of tightening and the slowdown in some economic measures in focus,” a note from D A Davidson said Wednesday.

The November flash reading of manufacturing conditions from S&P Global fell to 47.6 from 50.4 in October, compared with 50 expected in a survey compiled by Bloomberg.

The US Dollar index retreated 0.8% to 106.36.

US initial jobless claims jumped to 240,000 during the week ended Nov. 19 from 223,000 in the previous week, reflecting some weakness in the job market. The expectation in a Bloomberg survey of analysts was 225,000.

Not all macroeconomic data was, however, downbeat. Durable goods orders jumped 1% month-on-month in October from a 0.3% increase in the previous month, the Census Bureau said Wednesday. The consensus on Econoday was for a 0.4% gain.

West Texas Intermediate futures plunged 4.5% to $77.35.

“Crude oil prices have traded lower this month in response to a drop in demand from China as Covid cases surge to near a record with restrictions of movements currently impacting 48 cities,” Saxo Bank said in a note.

Excluding inventories in the Strategic Petroleum Reserve, US commercial crude oil stocks fell 3.7 million barrels in the ended Nov. 18 following a 5.4-million-barrel drop in the previous week, a larger decline than the 2.6-million-barrel slump expected in a survey compiled by Bloomberg.

In company news, Autodesk (ADSK) narrowed its full-year guidance after reporting an in-line fiscal third quarter in which a strong dollar and a bigger-than-expected change in demand in the tenure of contracts restrained its results. Shares slumped 6.1% intraday, the most on the S&P 500 and the Nasdaq.

Deere & Co. (DE) reported better-than-expected fiscal fourth-quarter results as price increases helped lift sales, while the company provided an upbeat outlook for the ongoing financial year. Shares advanced 5.9% intraday, the top gainer on the S&P 500.

Gold was up 0.2% to $1,743.41 per troy ounce, while silver was up 1.4% to $21.33 per ounce.

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