US Stocks Rise as Traders Digest Fed Minutes: Markets Wrap

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(Bloomberg) — US stocks rose as investors parsed policy minutes from the Federal Reserve’s latest meeting that showed most officials backing slowing the pace of interest-rate hikes soon.

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The S&P 500 pushed higher after the meeting minutes released. Market trading volumes are expected to be lighter, given the US Thanksgiving holiday on Thursday. Treasuries rallied, with the 10-year yield around 3.70%. The dollar extended its drop.

The publication of minutes from the Fed’s Nov. 1-2 meeting is being studied for how united policy makers were over a higher peak for interest rates than previously signaled in their fight against inflation. Several officials backed the need to slow the tempo of hikes, while only a smaller number underscored the need for a higher terminal rate.

Since that meeting, investors have parsed a bevy of economic data that somewhat eased inflation concerns, further strengthening the case for smaller rate hikes.

Read More: Key Takeaways From Minutes of Fed’s November Meeting on Rates

“From what I’ve seen, it’s exactly the same message we heard at the press conference: slower and possibly higher peak Fed funds rate,” said Dan Suzuki, deputy chief investment officer at Richard Bernstein Advisors LLC. “Any major reaction off of the minutes is probably an overreaction.”

The “corrective price action” in the dollar, oil and Treasury yields suggests the market thinks peak inflation is behind us, says Craig Johnson, Piper Sandler’s chief market technician.

“Any slightly confirming signal from the Fed could thrust equities higher into the holiday season.”

European investors, meanwhile, digested data showing that private-sector activity in Germany and France — the euro area’s top two economies — contracted in November. This painted a bleak picture for a region that may already be in recession. A separate survey showed that the UK economy is in recession, with the downturn expected to worsen into 2023.

A gauge measuring Euro-area activity in manufacturing and services unexpectedly rose in November. It signaled that businesses see tentative signs that the region’s economic slump may be easing as record inflation cools and expectations for future production improve.

Key events this week:

  • ECB publishes account of its October policy meeting, Thursday

  • US stock and bond markets are closed for the Thanksgiving holiday, Thursday

  • US stock and bond markets close early, Friday

Some of the main moves in markets:

Stocks

  • The S&P 500 rose 0.6% as of 2:33 p.m. New York time

  • The Nasdaq 100 rose 0.9%

  • The Dow Jones Industrial Average rose 0.3%

  • The MSCI World index rose 1.1%

Currencies

  • The Bloomberg Dollar Spot Index fell 0.7%

  • The euro rose 0.9% to $1.0396

  • The British pound rose 1.4% to $1.2057

  • The Japanese yen rose 1.3% to 139.37 per dollar

Cryptocurrencies

  • Bitcoin rose 1.9% to $16,443.97

  • Ether rose 3.3% to $1,167.18

Bonds

  • The yield on 10-year Treasuries declined five basis points to 3.70%

  • Germany’s 10-year yield declined five basis points to 1.93%

  • Britain’s 10-year yield declined 13 basis points to 3.01%

Commodities

  • West Texas Intermediate crude fell 3.9% to $77.77 a barrel

  • Gold futures rose 0.7% to $1,766.30 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Vildana Hajric, Peyton Forte, John Viljoen and Wayne Ramsey.

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