(Reuters) – The S&P 500 pared some gains in choppy trade on Wednesday, after minutes from the Federal Reserve’s latest meeting showed that while officials agreed to slow the pace of interest rate hikes, they remained firmly focused on controlling inflation.
Officials at the Federal Reserve’s December 13-14 policy meeting agreed that the US central bank should continue to increase the cost of credit to control the pace of price increases but in a gradual manner aimed at reducing risks to economic growth.
Investors have been scrutinizing the central bank’s internal deliberations for clues about the bank’s future path. After the meeting, Chairman Jerome Powell said more increases were needed and struck a more hawkish tone than investors expected at the time.
“It’s a record-breaking one; every time the Fed hints at higher rates or confirms higher rates, the market sells,” said Jake Dollarhyde, CEO of Longbow Asset Management in Tulsa, Oklahoma.
“This market wants to go higher but it just needs some good news at some point. Investors are reacting to the past and ignoring the present. Comments from (Minneapolis Fed President Neil) Kashkari today was good news. He was pessimistic, and he is usually hawkish.”
By 2:34 p.m. EST, the Dow Jones Industrial Average (.DJI) It fell by 39.99 points, or 0.12%, at 33,096.38 points. Standard & Poor’s 500 (.SPX) rose 8.1 points, or 0.21%, to 3,832.24 points; and the Nasdaq Composite (nineteenth) It added 5.71 points, or 0.06%, to 10,392.70 points.
S&P rate-sensitive technology index (.SPLRCT) It lost ground after the minutes and was last down 0.4%. Even the banking sector (.SPXBK)which is benefiting from higher rates, gave up some of its gains after the minutes but was still up 1.5% on the day.
Earlier in the day, data showed that US employment opportunities in November indicated a tight labor market, giving the Fed cover to stick to its tightening campaign for longer, while other data showed that manufacturing contracted further in December.
The Minneapolis Fed’s Kashkari on Wednesday stressed the need for continued rate hikes, setting his own forecast that the policy rate should pause at 5.4%.
US stocks fell in 2022 due to fears of a recession due to tightening monetary policy, as the three major stock indices recorded their largest annual losses since 2008.
Market participants see a 66.7% chance of a 25 basis point rate hike from the Fed in February, and see rates peaking at 4.98% by June.
Advance issues outnumbered declining issues on the NYSE by a ratio of 3.90 to 1; On the Nasdaq, the ratio was 2.43 to 1 in favor of advanced traders.
The S&P 500 posted three new 52-week highs and no new lows. The Nasdaq index posted 75 new highs and 46 new lows.
(Reporting by Sinead Karoo in New York and Shubham Batra, Amrutha Khandekar and Ankika Biswas in Bengaluru; Editing by Shonak Dasgupta and Jonathan Otis
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