Wall St stocks rise while dollar loses ground after Fed Minutes
By Sinéad Carew and Elizabeth Howcroft
NEW YORK/LONDON (Reuters) – Wall Street’s equity indexes edged higher in volatile trading on Wednesday while the dollar lost a little ground as investors digested minutes from the latest Federal Reserve meeting and waited for U.S. inflation data due on Thursday.
The dollar pared gains after climbing to a fresh 24-year peak versus the yen, holding above levels that prompted intervention by Japan last month. Sterling regained ground after a sharp fall the previous day as investors eyed the Bank of England’s next steps.
Wall Street gained some ground after the minutes of the Sept. 20-21 meeting showed many Fed officials “emphasized the cost of taking too little action to bring down inflation likely outweighed the cost of taking too much action.”
“For the most part there’s nothing too earth shattering in the Fed minutes. The fact they’re saying that there is more of a risk doing too little than doing too much maybe reinforces the idea that they’re more likely to continue to raise rates at a quick pace,” said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance in Charlotte, North Carolina.
But he cited discussions of calibrating the response, suggesting awareness of the risk of hiking rates too fast.
“They’ve been talking about how they’re willing to risk a recession in order to bring inflation back under control but it’s possible that as the recession risks increase they may lose their nerve a little bit,” said Zaccarelli.
The Dow Jones Industrial Average rose 117.57 points, or 0.4%, to 29,356.76, the S&P 500 gained 7.26 points, or 0.20%, to 3,596.1 and the Nasdaq Composite added 34.77 points, or 0.33%, to 10,460.96. [.N]
The pan-European STOXX 600 index lost 0.53% and MSCI’s gauge of stocks across the globe gained 0.04%.
Global equity markets have been volatile due to heightened fears about an economic slowdown and the impact of aggressive rate hikes by central banks.
On Tuesday, Wall Street stocks had switched from green to red after BoE Governor Andrew Bailey said pension funds hit by a spike in UK gilt yields had just three days to fix their problems before the BoE ends its emergency bond-buying scheme.
The BoE has also signaled privately to lenders that it is prepared to extend support beyond Friday’s deadline if necessary, the Financial Times reported.
Wednesday’s U.S. inflation reading, the Producers Price Index (PPI), did not alter expectations for the Fed’s November rate hike. Still, investors were laser-focused on Thursday’s Consumer Price Index (CPI).
“The market is looking ahead to the CPI release tomorrow,” said Zaccarelli with some bulls hoping that if inflation slows it will give the Fed reason to “slow down or pause.”
In currencies Sterling last traded at $1.1093, up 1.19% on the day after going as low as $1.0925 earlier.
The euro was down 0.06% to $0.9697 while the Japanese yen weakened 0.66% versus the greenback at 146.82 per dollar,
[FRX]
In treasuries the recent sell-off eased a bit. Benchmark 10-year notes were down 4.3 basis points to 3.896%, from 3.939% late on Tuesday. [US/]
Oil futures fell for a third straight day as a stronger dollar and worries about weaker demand and rising interest rates outweighed supply concerns after last week’s OPEC+ cut to its production target. [O/R]
U.S. crude futures settled down 2.3% at $87.27 per barrel and Brent was at $92.78, down 1.6% on the day.
Gold eked out gains on Wednesday after five sessions of losses, although an uptick in the dollar kept prices in check as investors waited for the Fed minutes.
Spot gold added 0.5% to $1,673.79 an ounce. U.S. gold futures fell 0.54% to $1,670.30 an ounce.
(Reporting by Sinéad Carew in New York, Elizabeth Howcroft in London; Editing by Alex Richardson, Emelia Sithole-Matarise, Nick Macfie and David Gregorio)
