The U.S. stocks rise as investors analyze latest Fed minutes while awaiting September inflation report. U.S. stocks rose on Wednesday as investors digested the latest minutes of September’s Fed meeting and looked ahead for the September inflation CPI report, which is set to roll out on Thursday morning.
Major indexes ended the day mostly flat, though the S&P 500 and Nasdaq Composite finished slightly in the green. U.S. stocks rise was seen with the Dow Jones Industrial Average (^DJI) finished up 0.2%, while the S&P 500 (^GSPC) gained 0.4%. U.S. stocks rise was also seen in the tech-heavy Nasdaq Composite (^IXIC) that put on roughly 0.7%, building on Tuesday’s win.
Fed rate hike predicted
Central bankers signaled that they would continue to remain cautious on inflation at their last policy meeting, per the latest minutes. Though they acknowledged inflation expectations remain “well anchored,” prices are still well-above the Fed’s 2% target, having accelerated 3.7% in August.
Around two-thirds of one more Fed rate hike is predicted by its members before the end of 2023. This is according to the Fed’s dot plot of interest rate expectations.
Investors, though, have priced in a 91% chance the Fed will keep interest rates level at their next policy meeting, per the CME FedWatch tool.
Inflationary pressures increased
When accounting for inflationary pressures stemming from the Russia-Ukraine war, the Israel-Hamas war, and the UAW strike, fed rates rise is likely at just 0.25% in December before pausing for good, according to Comerica Bank chief economist Bill Adams.
“Either way, the Fed is likely to pivot to interest rate cuts in mid-2024 as core inflation, wage growth, housing prices, and other broad measures of price pressures move closer to pre-pandemic levels,” Adams said in a note on Wednesday.
Looking ahead
Investors are now looking ahead to the September inflation CPI report, due at 8:30 a.m. on Thursday. Economists are expecting inflation to have accelerated 3.6% last month, with core prices accelerating 4.1%.
Stock update
U.S. indexes at the 4:00 p.m. closing bell on Wednesday:
- S&P 500: 4,376.94, up 0.43%
- Dow Jones Industrial Average: 33,804.81, up 0.19% (+65.51 points)
- Nasdaq Composite: 13,659.68, up 0.71%
The housing market is in a bubble, but home prices may not fall anytime soon.
Update on other markets
In commodities, bonds, and crypto:
- Oil: West Texas Intermediate crude oil fell 2.27% to $84.02 a barrel. Brent crude, the international benchmark, slipped 1.5% to $86.33 a barrel.
- Metal: Gold inched higher 0.64% to $1,887.30 per ounce.
- Treasury: The 10-year Treasury yield slipped eight basis-points to 4.566%.
- Crypto: Bitcoin slumped 2.63% to $26,693.
