US stocks fluctuated as investors await the release of policy minutes from the Federal Reserve’s latest meeting for potential signs that the central bank may slow its pace of interest-rate hikes.
(Bloomberg) — US stocks fluctuated as investors await the release of policy minutes from the Federal Reserve’s latest meeting for potential signs that the central bank may slow its pace of interest-rate hikes.
The S&P 500 and the Nasdaq 100 swung between modest losses and gains.
Market trading volumes are expected to be lighter, given the US Thanksgiving holiday on Thursday.
Treasuries pared the gains it notched after weaker-than-expected purchasing managers’ index readings for November.
A gauge of dollar strength dipped after data showed that US unemployment applications rose more than expected, in a sign of cooling in the labor market. Oil fell as the European Union discussed imposing a price cap on Russian oil between $65 and $70 a barrel.
The publication of minutes from the Fed’s Nov.
1-2 meeting — due at 2 p.m. in Washington — will be studied for how united policy makers were over a higher peak for interest rates than previously signaled in their fight against inflation.
However, since that meeting, investors have parsed a bevy of economic data that somewhat eased inflation concerns.
That, along with recent rhetoric from Fed speakers, has made some investors anticipate the central bank will moderate its pace of rate hikes soon.
Meeting minutes could still show Fed officials diverging over the terminal rate.
“2022 was a year marked by extremely expensive starting valuations, resilient growth, very high inflation, and then very hawkish policy,” said Andrew Sheets, Morgan Stanley chief cross asset strategist, on Bloomberg TV.
“When we think about next year, all those elements are somewhat different. Valuations have normalized. We think growth will be weaker, but inflation will be lower and policy will be a lot less hawkish.”
The “corrective price action” in the dollar, oil and Treasury yields suggests the market thinks peak inflation is behind us, says Craig Johnson, Piper Sandler’s chief market technician.
“Any slightly confirming signal from the Fed could thrust equities higher into the holiday season.”
European investors, meanwhile, digested data showing that private-sector activity in Germany and France — the euro area’s top two economies — contracted in November.
This painted a bleak picture for a region that may already be in recession. A separate survey showed that the UK economy is in recession, with the downturn expected to worsen into 2023.
A gauge measuring Euro-area activity in manufacturing and services unexpectedly rose in November.
It signaled that businesses see tentative signs that the region’s economic slump may be easing as record inflation cools and expectations for future production improve.
Key events this week:
- S&P Global PMIs: US, Wednesday
- University of Michigan sentiment, Wednesday
- Minutes of the Federal Reserve’s Nov.
1-2 meeting, Wednesday
- ECB publishes account of its October policy meeting, Thursday
- US stock and bond markets are closed for the Thanksgiving holiday, Thursday
- US stock and bond markets close early, Friday
Some of the main moves in markets:
Stocks
- The S&P 500 was little changed as of 1:07 p.m.
New York time
- The Nasdaq 100 rose 0.2%
- The Dow Jones Industrial Average was little changed
- The MSCI World index rose 1.1%
Currencies
- The Bloomberg Dollar Spot Index fell 0.5%
- The euro rose 0.6% to $1.0364
- The British pound rose 1.2% to $1.2029
- The Japanese yen rose 1% to 139.88 per dollar
Cryptocurrencies
- Bitcoin rose 1.6% to $16,383.96
- Ether rose 2.1% to $1,153.88
Bonds
- The yield on 10-year Treasuries declined two basis points to 3.74%
- Germany’s 10-year yield declined five basis points to 1.93%
- Britain’s 10-year yield declined 13 basis points to 3.01%
Commodities
- West Texas Intermediate crude fell 4.3% to $77.47 a barrel
- Gold futures rose 0.3% to $1,759.20 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Vildana Hajric, Peyton Forte, Isabelle Lee, John Viljoen and Wayne Ramsey.
More stories like this are available on bloomberg.com
©2022 Bloomberg L.P.
