After the Feds Reserve’s November meeting minutes revealed that interest rate increases may soon slow, Wall Street’s major indexes ended Wednesday with significant gains.
The minutes stated that a “substantial majority” of decision-makers concurred that it would “likely soon be appropriate” to limit the rate of increasing interest rates. “The uncertain lags and magnitudes associated with the effects of monetary policy actions on economic activity and inflation were among the reasons cited regarding why such an assessment was important.”
Michael James, managing director of equity trading at Wedbush Securities in Los Angeles said that “What equity markets needed to see for the recent strength to continue was what we got from the minutes.”
The meeting report indicated future lower rate hikes, echoing statements made by the other officials over the last few weeks. The Feds Open Market Committee, which sets interest rates, is largely expected to reduce its rate hike in December from four straight rises of 0.75 percentage points to 0.5%.
The modest increases would allow policymakers a chance to assess the effects of the series of rate hikes, according to the minutes. The central bank will decide on interest rates again on December 14.
Officials stated that they continue to observe little signs of inflation subsiding despite their hints that less drastic actions were to come. Some committee members, though, expressed worry about threats to the financial system if the Feds continued to move forward at its current quick rate.
Investors have grown more confident that price pressures have started to ease since the Feds most recent meeting on November 1-2, meaning that modest rate increases may be able to contain inflation.
The Nasdaq Composite (.IXIC) increased 110.91 points, or 0.99%, to 11,285.32 while the S&P 500 (.SPX) gained 23.68 points or 0.59%. The Dow Jones Industrial Average (.DJI) increased 95.96 points, or 0.28%, to 34,194.06.
The U.S. stock market was open for a half-session on Friday, but trading volume was low on Thursday due to the Thanksgiving break.
A mixed bag of economic statistics earlier on Wednesday caused the yield on the standard 10-year Treasury note to decline, which helped lift stocks.
The number of Americans who applied for new unemployment benefits increased more than anticipated last week, and in November, U.S. economic activity declined for the fifth consecutive month. Consumer confidence increased a little bit, and home sales exceeded forecasts.
Portfolio manager Moez Kassam of Anson Funds said that “What I think you’re seeing is renewed investor enthusiasm fuelled by those who see that beautiful light at the end of what has been a very dark tunnel. And there has been so much money on the sidelines that is rushing back into the markets and waiting to get back into the action.”
Heavyweight stocks increased by 1.00% and 0.72%, respectively, including Meta Platforms Inc. (META.O) and Amazon.com Inc. (AMZN.O).
Tesla Inc. (TSLA.O) increased 7.82% as a result of Citigroup upgrading the stock of the electric vehicle manufacturer from a “sell” rating to “neutral.”
Following the farm equipment manufacturer’s release of higher-than-anticipated quarterly earnings, Deere & Co (DE. N) saw a spike of 5.03%.
With heavy markdowns to entice shoppers scared about inflation, Nordstrom Inc. saw its share price drop 4.24% as it lowered its profit prediction.
Shares traded on American exchanges were 9.25 billion, down from the 11.6 billion averages for the entire session for the previous 20 trading days.
On the New York Stock Exchange, advancers outnumbered decliners 1.97 to 1; on the Nasdaq, advancers had a 1.61 to 1 advantage.
The Nasdaq Composite had 97 new highs and 126b new lows, compared to the S&P 500’s 21 new 52-week highs and no new lows.
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