S&P 500 swings wildly as Fed minutes point to higher for longer rate regime
By Yasin Ebrahim
Investing.com -- The S&P 500 swung wildly Wednesday, as the Federal Reserve December meeting minutes signaled higher for longer rates ahead at a time when data showing a tight labor market stoked fears of a pick-up in inflation.
The S&P 500 rose 0.3%, the Dow Jones Industrial Average fell 0.1%, or 26 points, and the Nasdaq Composite was 0.15% higher.
Federal Reserve policymakers agreed that a sustained period of restrictive policy would be needed to cool "unacceptably high" inflation, according to the minutes of the Fed's December meeting released on Wednesday.
The minutes stoked fears of higher for longer rates just as data highlighted a slower-than-expected dent in labor demand.
The U.S. Labor Department's latest Job Openings and Labor Turnover Survey (JOLTs) report, a measure of labor demand, showed job openings in November fell less than expected to about 10.5 million, compared with expectations of 10.0 million.
The JOLTS report was “very strong,” Jefferies said in a note, warning that without a “substantial reduction in labor demand…the Fed will not be comfortable pausing, let alone cutting rates.”
U.S. Treasury yields , however, continued to trade in the red and were reluctant to price in more aggressive Federal Reserve rate hikes.
Banking stocks, however, shrugged off the fall in Treasury yields, the enemy of net interest margins, as investors looked ahead to the start of quarterly earnings season in earnest next week.
“4Q earnings should be decent for most banks, in our view, with higher rates and solid loan growth continuing to benefit net interest income in the near term, but positive momentum may start to fade,” Wedbush said in a note.
Citigroup Inc (NYSE: C ), SVB Financial Group (NASDAQ: SIVB ), Zions Bancorporation (NASDAQ: ZION ) led the gainers in financials.
In consumer discretionary, Tesla climbed 4% following a 12% plunge a day earlier, while BBWI jumped 12% following a price upgrade to $52 from $50 from Piper Sandler.
Travel and leisure stocks were also in focus as cruise stocks rallied after Carnival said it would raise its price for U.S. and European guests starting April 1.
Carnival Corporation (NYSE: CCL ) was up 8%, while Royal Caribbean Cruises Ltd (NYSE: RCL ) and Norwegian Cruise Line Holdings Ltd (NYSE: NCLH ) were up more than 6% and 4% respectively.
Microsoft Corporation (NASDAQ: MSFT ), meanwhile, fell 5% after UBS downgraded the stock to neutral from buy, citing demand headwinds for the company’s office and cloud businesses.
A Micron-led surge in semiconductor stocks helped keep a lid on downside momentum in tech.
Micron Technology (NASDAQ: MU ) rallied nearly 7% after Daiwa talked up the prospect of higher memory prices on expectations for a rebound in demand in the second half of the year.
Add Chart to Comment
We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:
- Enrich the conversation
- Stay focused and on track. Only post material that’s relevant to the topic being discussed.
- Be respectful. Even negative opinions can be framed positively and diplomatically.
- Use standard writing style. Include punctuation and upper and lower cases.
- NOTE: Spam and/or promotional messages and links within a comment will be removed
- Avoid profanity, slander or personal attacks directed at an author or another user.
- Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
- Only English comments will be allowed.
Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.
Drop an image here or Supported formats: *.jpg, *.png, *.gif up to 5mb
Drop an image here or