(Bloomberg) – U.S. stocks rose as investors await the release of minutes from the Federal Reserve’s latest meeting for potential signs that the central bank may slow its pace of raising interest rates.
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The S&P 500 climbed after closing at its highest level since mid-September on Tuesday. The Nasdaq 100 surged after hesitating early in the session. Sentiment was boosted after the latest data showed US consumers reversing their near-term inflation expectations. Market trading volumes are expected to be lighter, given the US Thanksgiving holiday on Thursday.
Treasury yields fell after weaker-than-expected purchasing managers’ index readings for November. An indicator of dollar strength fell after data showed U.S. jobless claims rose more than expected, a sign of a cooling labor market. Oil fell as the European Union considered imposing a price cap on Russian oil between $65 and $70 a barrel.
The release of minutes from the Nov. 1-2 Fed meeting — scheduled for 2 p.m. in Washington — will be studied to determine how well United policymakers overshot a higher-than-reported interest rate spike. previously in their fight against inflation. However, since that meeting, investors have been analyzing economic data that showed signs of slowing inflation. That, combined with recent rhetoric from Fed speakers, has some investors anticipating that the central bank will soon moderate its pace of rate hikes.
“2022 has been a year of extremely expensive starting valuations, resilient growth, very high inflation, and then very hawkish politics,” Andrew Sheets, chief cross-asset strategist at Morgan Stanley, told Bloomberg TV. “When you think about next year, all of those things are somewhat different. Valuations have normalized. We think growth will be weaker, but inflation will be lower and politics will be a lot less hawkish.
“Corrective price action” in dollar, oil and Treasury yields suggests the market thinks peak inflation is behind us, says Craig Johnson, chief market technician at Piper Sandler.
“Any mildly confirmatory signal from the Fed could push stocks higher over the holiday season.”
European investors, meanwhile, digested data showing that private sector activity in Germany and France – the two largest eurozone economies – contracted in November. It painted a grim picture for a region that may already be in recession. A separate survey showed the UK economy is in recession, with the downturn expected to worsen in 2023.
Meanwhile, an indicator measuring euro zone activity in manufacturing and services rose unexpectedly in November, signaling that businesses are seeing tentative signs that the region’s economic slump may be easing in the future. as record inflation cools and expectations for future output improve.
Key events this week:
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S&P Global PMIs: US, Wednesday
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University of Michigan sentiment, Wednesday
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Minutes of the Federal Reserve’s Nov. 1-2 meeting, Wednesday
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The ECB publishes the minutes of its October policy meeting on Thursday
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US stock and bond markets are closed for the Thanksgiving holiday, Thursday
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U.S. stock and bond markets close early on Friday
Some of the major movements in the markets:
Shares
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The S&P 500 rose 0.5% at 10:30 a.m. PT
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The Nasdaq 100 rose 0.9%
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The Dow Jones Industrial Average rose 0.3%
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The Stoxx Europe 600 rose 0.5%
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The MSCI World index rose 1.1%
Currencies
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The Bloomberg Dollar Spot Index fell 0.4%
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The euro rose 0.5% to $1.0355
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The British pound rose 1.2% to $1.2023
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The Japanese yen rose 0.7% to 140.21 to the dollar
Cryptocurrencies
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Bitcoin rose 2% to $16,449.53
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Ether rose 2.9% to $1,162.36
Obligations
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The yield on 10-year Treasury bills fell three basis points to 3.72%
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Germany’s 10-year yield fell five basis points to 1.93%
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The UK 10-year yield fell 14 basis points to 3.00%
Goods
This story was produced with assistance from Bloomberg Automation.
–With help from Vildana Hajric, Peyton Forte and Isabelle Lee.
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