Major U.S. stock market data extended modest gains on Wednesday after minutes from the Federal Reserve’s November meeting showed policymakers agreed that a gradual rate hike could happen soon.
Fed officials he said higher inflation meant the federal funds rate would have to rise more than expected, but he also said the rate had entered restrictive territory.
“Many of the participants felt that a reduction in the rate of increase would be appropriate in the near future,” he said in the minutes. The Fed is expected to raise the benchmark rate by 50 bps at its meeting next month after four consecutive 75-bp hikes.
The Nasdaq Group (COMP.IND) left 1.11%The S&P 500 (SP500) gained 0.64% and Dow (DJI) inside 0.37% higher.
Volume is typically low as market participants jump into the holiday rush ahead of Thanksgiving. The market will be closed on Thursday and open for half a day on Friday.
Big gains were pared by energy stocks as oil prices fell on reports that the European Union is targeting the price of Russian crude oil.
The 10-year Treasury yield (US10Y) fell 4 bps to 3.71% and the 2-year yield (US2Y) fell 3 bps to 4.49%.
Of the 11 sectors in the S&P 500, nine trade in the green. Consumer discretionary stocks gained, with Tesla rising on the list after positive reviews from analysts, potential South Korean developments and Cybertruck developments.
Autodesk was the biggest loser on the S&P 500 after it issued disappointing guidance.
On the economic front, fixed assets jumped more than expected in October and the US PMI Composite Flash fell sharply in November.
In response to the information on fixed assets, Pantheon Macroeconomics said, “We expect a significant gain in the next year because the demand, which has increased in the last few years, can be fulfilled.”
The first week of unemployment rose to a three-month high of 240K, better than forecast. “Initial and ongoing claims are rising from historic lows. They may increase significantly before reaching levels that indicate a weakening labor market. For several months,” said economist Jeffery Thomas Simons.
New home sales rose unexpectedly in October and the median price of new homes also rose. Also, loan repayments rose 2.2% amid low interest rates.
Meanwhile, Michigan Consumer Sentiment numbers for November were also higher than expected. “The change is encouraging, but the index is still the lowest it reached in June, 50,” said Jefferies’ Simons.