Wed, December 07, 2022

Stocks Advance as Fed-Minutes Rate Hint

Stocks Advance as Fed-Minutes Rate Hint

Federal Reserve meeting showed support for sharp interest-rate increases. This sent the US dollar down. A gauge of global stocks pushed for the highest level in more than two months. Officials are more focused on the destination of the federal-funds rate rather than the pace required to get there. They wait to see the effect of their most recent tightening. But meanwhile, the minutes also showed a preference for smaller hikes.

Wednesday’s gains were aided by better-than-expected consumer confidence reading from the University of Michigan’s benchmark survey. A surprise rise in single-family home sales over October also added up to them. High-quality firms with trustworthy profits and cash flow have become more attractive as interest rates and commodity prices have risen.

The U.S. dollar index, which tracks the US currency versus a basket of its overseas competitors, fell 1.05% to 106.09. This happened after figures revealed weekly jobless filings increasing by 17,000 to a March high of 240,000. A bigger-than-expected rate increase from the Reserve Bank of New Zealand, which raised its benchmark rate to a 14-year high of 4.25%, tempered the dollar’s overnight move.

The MSCI All-Country World Index has dropped around 19% this year. Experts anticipate more volatility and losses in this bear market, especially before reaching a bottom later in 2023, even if equities have climbed somewhat since the summer. Before a sustained rally in equities gets underway, they believe interest rates will peak and economic growth will stabilize.

Stocks Ending Higher Boost the Market

The S&P 500 climbed 0.59%, while the Dow Jones Industrial Average rose 95 points, or 0.28%, to 34,194 for the month. A solid early-market move in Tesla (TSLA) and a retreat in Treasury bond yields, helped the tech-heavy Nasdaq climb 0.99%. Yields on benchmark 10-year bonds fell to 3.695%, and those on 2-year bonds increased to 4.483%. Fourth-quarter expansion is estimated to reach 4.2% by the Atlanta Fed’s GDPNow prediction model. It will likely rise following today’s better-than-expected data on durable goods orders.

Analysts at Citigroup boosted their rating on Tesla, while Morgan Stanley noted that the company’s $500 billion collapse might be ending. Tesla’s stock rose 7.8%. Following reports of worker protests over pay, working conditions at Apple’s main iPhone factory in China, and ongoing supply-chain difficulties linked to Beijing’s strict COVID requirements, shares were barely 0.59% higher. Nordstrom (JWN) shares fell 4.2% after the firm reported third-quarter profits above forecasts. As a result of ongoing supply chain inflation and slower early holiday spending, it did, however, lower its profit outlook for the entire fiscal year.

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