US stocks rose modestly after minutes of the last Federal Reserve meeting showed officials committed to tightening policy but that calibration was needed. Treasuries rose and the dollar fell. UK markets were roiled once again by confusion over the country’s policies.
(Bloomberg) — US stocks rose modestly after minutes of the last Federal Reserve meeting showed officials committed to tightening policy but that calibration was needed. Treasuries rose and the dollar fell. UK markets were roiled once again by confusion over the country’s policies.
The S&P 500 is attempting to stage a comeback after a five-day losing streak. PepsiCo Inc. led gains in consumer staples as drink and snack sales bucked inflation. The tech-heavy Nasdaq 100 posted modest gains. Treasuries yields fell across the curve, and the dollar retreated.
Fed minutes showed officials committed to restrictive rates and holding them there to get inflation back to their target, though several said it would be important to calibrate the pace of hikes to mitigate adverse risks to the economy.
“The market is waiting for the CPI print tomorrow more than it was waiting for minutes,” according to Sarah Hunt of Alpine Woods Capital Investors. “There may be a little hint of relief on the ‘calibrate’ statement, but I think that with the speed of hikes so far it would be irresponsible not to have some sort of possible slowdown coming in hikes, even if it isn’t a cessation in hikes.”
Data earlier showed prices paid to US producers rose in September by more than expected ahead of a key measure of consumer inflation due Thursday that’s set to return to a four-decade high.
“Prices remain elevated so it shouldn’t be a surprise to see producer goods and services rise,” Mike Loewengart, head of model portfolio construction at Morgan Stanley Global Investment Office, wrote. “No doubt the Fed still has its work cut out for them, and if tomorrow’s CPI read is hot, don’t be surprised to see some investors come to grips with how long the road to tamer inflation may be.”
Read more: Top-Ranked Chartist Says Gaming Out Fed Pivot Is ‘Fool’s Errand’
Earlier, comments by Minneapolis Fed chief Neel Kashkari reaffirmed policy makers’ commitment to the current rate-hike path, with the Minneapolis Fed chief saying the bar for a pivot away from monetary policy tightening is “very high.”
PepsiCo jumped the most in more than two years after lifting its forecast for the year on the back of better-than-estimated third-quarter profit as drink and snack sales buck inflation. Moderna Inc. posted double-digit gains after Merck & Co. said it would exercise an option to work in partnership with the biotech on a messenger RNA cancer vaccine. The reporting season will kick off in earnest Friday with results from banks including JPMorgan Chase & Co. and Citigroup Inc.
Read more: JPMorgan, Citi May Show Growth Elusive Despite Interest Income
A selloff in long-maturity UK debt gathered pace after the Bank of England damped hopes it would extend its bond-buying support into next week. The yield on 30-year gilts surged above 5%, nearing levels that just last month drew the central bank’s intervention, before easing again after the BOE snapped up billions in its daily operations.
Kristina Hooper, chief global market strategist for Invesco, said in a note that while world economy is slowing after rate hikes, there’s yet to be a meaningful decline in inflation.
“This is an extraordinary monetary policy tightening environment and we are waiting to see if something breaks globally,” she said. “The UK has come close.”
On the energy front, oil in New York dropped below $88 a barrel on slowdown fears. OPEC trimmed projections for the amount of crude it will need to pump this quarter, while Russia’s President Vladimir Putin said any energy infrastructure in the world is at risk after the explosions on the Nord Stream pipelines.
NATO Secretary General Jens Stoltenberg urged alliance members to step up supplies of air defense systems to Ukraine, condemning Russian strikes. In China, Shanghai is quietly shutting down schools and a raft of other venues as officials try to rein in a flareup that’s hit the financial hub.
Key events this week:
- Earnings this week include: JPMorgan Chase & Co., Citigroup Inc., Morgan Stanley, BlackRock Inc., Delta Air Lines Inc., UnitedHealth Group Inc., U.S. Bancorp, Wells Fargo & Co.
- FOMC minutes for September meeting, Wednesday
- Fed’s Michelle Bowman and Neel Kashkari speak
- ECB’s Christine Lagarde speaks
- US CPI, initial jobless claims, Thursday
- G-20 finance ministers and central bankers meet, Thursday
- China CPI, PPI, trade, Friday
- US retail sales, business inventories, University of Michigan consumer sentiment, Friday
- BOE emergency bond buying is set to end, Friday
Some of the main moves in markets:
Stocks
- The S&P 500 rose 0.3% as of 2:31 p.m. New York time
- The Nasdaq 100 rose 0.5%
- The Dow Jones Industrial Average rose 0.5%
- The MSCI World index rose 0.2%
Currencies
- The Bloomberg Dollar Spot Index fell 0.1%
- The euro was unchanged at $0.9708
- The British pound rose 1.3% to $1.1112
- The Japanese yen fell 0.6% to 146.73 per dollar
Cryptocurrencies
- Bitcoin rose 0.6% to $19,142.5
- Ether rose 1.2% to $1,297.62
Bonds
- The yield on 10-year Treasuries declined five basis points to 3.90%
- Germany’s 10-year yield advanced two basis points to 2.31%
- Britain’s 10-year yield was little changed at 4.44%
Commodities
- West Texas Intermediate crude fell 2.5% to $87.12 a barrel
- Gold futures fell 0.1% to $1,684.10 an ounce
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