- Stocks lose ground after Fed minutes
- Job offers fall less than expected
- Dow down 0.12%, S&P up 0.21%, Nasdaq up 0.06%
Jan 4 (Reuters) – The S&P 500 pared some gains in volatile trading on Wednesday, after minutes from the Federal Reserve’s latest meeting showed that while officials agreed to slow the pace of rate hikes interest, were still focused on controlling inflation.
Officials at the Fed’s Dec. 13-14 policy meeting agreed that the U.S. central bank should continue to raise the cost of credit to control the pace of price increases, but in a gradual manner with the intention to limit risks to economic growth.
Investors were looking into the central bank’s internal deliberations for clues about its future path. After the meeting, Chairman Jerome Powell said more hikes were needed and took a more hawkish tone than investors had expected at the time.
“It’s a broken record; every time the Fed hints at higher rates or confirms higher rates, the market sells off,” said Jake Dollarhide, chief executive of Longbow Asset Management in Tulsa, Oklahoma.
“This market wants to go up, but it just needs some good news at some point. Investors are reacting to the past and ignoring the present. Kashkari’s (Minneapolis Fed President Neel) comments today were good news. typically hawkish.”
As of 2:34 PM EST, the Dow Jones Industrial Average (.DJI) was down 39.99 points, or 0.12%, at 33,096.38; the S&P 500 (.SPX) gained 8.1 points, or 0.21%, to 3,832.24; and the Nasdaq Composite (.IXIC) added 5.71 points, or 0.06%, to 10,392.70.
The S&P’s rate-sensitive technology index ( .SPLRCT ) lost ground after minutes, down 0.4%. Even the banking sector (.SPXBK), which benefits from higher rates, lost ground after minutes but was still up 1.5% on the day.
Earlier in the day, data showed U.S. job offers in November pointed to a tight labor market, giving the Fed cover to keep its monetary tightening campaign longer, while other data showed that manufacturing contracted further in December.
The Minneapolis Fed’s Kashkari on Wednesday stressed the need to continue raising rates, setting his own forecast that the policy rate should be paused initially at 5.4%.
In 2022, US stocks were hit by recession worries due to aggressive monetary policy tightening, with all three major stock indexes posting their steepest annual losses since 2008.
Market participants see a 66.7% chance of a 25 basis point Fed rate hike in February and see rates reaching 4.98% in June.
Advances outnumbered decliners on the NYSE by a ratio of 3.90 to 1; on the Nasdaq, a 2.43 to 1 ratio favored the advancers.
The S&P 500 posted three new 52-week highs and no new lows; the Nasdaq Composite recorded 75 new highs and 46 new lows.
Reporting by Sinéad Carew in New York, Shubham Batra, Amruta Khandekar and Ankika Biswas in Bangalore; Editing by Shounak Dasgupta and Jonathan Oatis
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