US Stocks Rise as Fed Minutes Boost Sentiment: Markets Wrap

(Bloomberg) — US stocks ended Wednesday’s session higher after the Federal Reserve’s latest meeting minutes showed most officials backing slowing the pace of interest-rate hikes soon.

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The S&P 500 and the Nasdaq 100 notched gains for a second straight session. Treasuries rallied, with the benchmark 10-year yield around 3.69%. Wall Street’s fear gauge, the Cboe Volatility Index, fell to its lowest level in more than three months. US stock and bond markets will be closed on Thursday for the Thanksgiving holiday.

Several Fed officials backed the need to moderate the pace of rate hikes, the central bank’s Nov. 1-2 meeting minutes show. Only a small number of these officials underscored the need for a higher terminal rate. Since the Fed’s latest meeting, investors have parsed a bevy of economic data that somewhat eased inflation concerns, further strengthening the case for smaller rate hikes.

“The minutes were dovish as they recognized a softening in consumer demand and tightening international economic and financial conditions,” said Jay Hatfield of Infrastructure Capital Management.

Read More: Most Fed Officials Seek to Slow Pace of Interest-Rate Hikes Soon

Still, some investors think that the meeting minutes didn’t convey anything new and that markets may be overreacting to the perceived shift in tone.

“The minutes said that hikes can be smaller than 75bps but also that the terminal rate will need to be higher than previously thought — which also is pretty much what everyone at the Fed has been signaling anyway,” said Max Gokhman, chief investment officer at asset manager AlphaTrAI. “It’s almost weird we’re getting any kind of big moves on the minutes. I guess the market is happy to take a longer road to a more painful outcome given the reaction to the minutes.”

Story continues

Meanwhile, the dollar dropped for a second day as investors assessed a fresh batch of economic data. Business activity in the US continued to contract and separate data showed US unemployment applications rising more than expected, in a sign of cooling in the labor market.

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 4 p.m. New York time

• The Nasdaq 100 rose 1%

• The Dow Jones Industrial Average rose 0.3%

• The MSCI World index rose 1.1%

Currencies

• The Bloomberg Dollar Spot Index fell 0.8%

• The euro rose 1% to $1.0402

• The British pound rose 1.5% to $1.2065

• The Japanese yen rose 1.2% to 139.50 per dollar

Cryptocurrencies

• Bitcoin rose 2.9% to $16,594.92

• Ether rose 3.9% to $1,173.48

Bonds

• The yield on 10-year Treasuries declined six basis points to 3.69%

• 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 4.3% to $77.44 a barrel

• Gold futures rose 0.7% to $1,766.50 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Isabelle Lee and Peyton Forte.

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