US Manufacturing Hits 30-Month Low, Helping Boost Equities as Federal Reserve Closes in on Policy Goal

US equity indices 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 0.9% to 11,275.5, with the S&P 500 up 0.5% to 4,023.1, and the Dow Jones Industrial Average traded 0.2% higher at 34,177.8 after midday on Wednesday. Consumer discretionary and technology were among the biggest gainers, with all sectors but one, energy, in the green.

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The US 10-year yield fell 2.1 basis points to 3.74%.

“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 0.7% to 106.44.

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.

West Texas Intermediate futures plunged 4.5% to $77.28.

The drop comes as China grapples with rising cases of COVID-19, with the country reporting 29,157 new infections on Wednesday, according to reports, nearing the April record of 29,411. Bloomberg reported China is returning to mass testing and lockdown measures, lowering economic growth and cutting demand for oil from the world’s No.1 importer.

“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 noted.

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.

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