Wall St pares gain minutes after Fed confirms inflation

  • Stocks lose ground after Fed minutes
  • Job opportunities will be less than expected
  • The Dow rose 0.12%, the S&P 0.21% and the Nasdaq 0.06%.

Jan 4 (Reuters) – The S&P 500 pared some gains in volatile trade on Wednesday, minutes after the Federal Reserve’s last meeting, where officials agreed to cut interest rate hikes but showed they are still laser-focused on reining in inflation.

Officials at the Fed’s Dec. 13-14 policy meeting agreed that the US central bank will continue to raise borrowing costs to curb the pace of inflation.

Investors scrutinized the central bank’s internal deliberations for clues about its future path. After the meeting, Chairman Jerome Powell said more hikes were needed than investors had expected.

“It’s a broken record; every time the Fed hints at higher rates or confirms higher rates, the market sells off,” said Jake Dollarhyde, CEO of Longbow Asset Management in Tulsa, Oklahoma.

“This market wants to go up, but it needs some good news at some point. Investors react to the past and ignore the present. (Minneapolis Fed President Neal) Kashkari’s comments today were good news. He was angry, and he’s typically hawkish.”

At 2:34 PM EST, the Dow Jones Industrial Average (.DJI) down 39.99 points or 0.12% to 33,096.38; S&P 500 (.SPX) up 8.1 points or 0.21% to 3,832.24; and the Nasdaq Composite (.IXIC) It added 5.71 points or 0.06% to 10,392.70.

S&P’s rate-sensitive technical index (.SPLRCT) It lost ground minutes later and was last down 0.4%. Even the banking sector (.SPXBK)It lost some ground minutes later, benefiting from higher rates, but rose 1.5% on the day.

Earlier in the day, data showed U.S. job creation in November in a tight labor market, the Federal Reserve sticking to its monetary tightening campaign longer, while other data showed output shrank further in December.

The Minneapolis Fed’s Kashgari stressed the need for further rate hikes on Wednesday, setting his own forecast that the policy rate would initially be suspended at 5.4%.

U.S. stock markets were weighed down by worries about a recession due to aggressive monetary policy tightening in 2022, with the three major stock indexes posting their steepest annual losses since 2008.

Market participants see a 66.7% chance of a 25 basis point rate hike from the Fed in February, and a rate hike of 4.98% by June.

Advancing issues outnumber declining issues on the NYSE by a 3.90-to-1 ratio; 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 posted 75 new highs and 46 new lows.

Reporting by Sinead Carew in New York, Shubham Patra, Amrutha Khandekar and Angika Biswas in Bangalore; Editing by Shaunak Dasgupta and Jonathan Otis

Our Standards: Thomson Reuters Trust Principles.

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