Stock Markets Rise As Investors Study Federal Reserve Meeting Minutes

US stocks rose slightly after minutes from the Federal Reserve Released Investors began searching for insights into the state of the economy and the central bank’s efforts to tame inflation through interest rate increases.

At 4 p.m. ET on Wednesday, the S&P 500 was up 0.4%. The Nasdaq Composite was also up 0.4%. The Dow Jones Industrial Average rose 0.2%, or about 70 points.

Federal Reserve officials concluded at their meeting last month that they needed to accelerate the pace of interest rate increases due to increasingly worrying inflation expectations. Some investors believe that the Fed signals that it will stick to earlier telegraph plans to continue raising interest rates – and they worry that doing so will push the economy into recession.

“When the Federal Reserve last met, the primary concern in the market was inflation; the minutes reflected that. In the weeks that followed, the odds of a recession rose dramatically,” said Michael Rosen, chief investment officer at Angeles Investments. The face of monetary policy will become more severe as the Federal Reserve has to balance high inflation with a contracting economy.”

Federal fund futures were recently priced with a near 50% chance of a benchmark rate hike to 3.5% by December before falling in mid-2023, as markets adjust their long-term interest rate expectations, according to CME Group tracking.

“The market is pricing in a very moderate scenario where the Fed can contain inflation with fairly modest tightening,” said Mr. Rosen. “That sounds optimistic to me.”

Stocks have risen in recent days, as some investors have shifted their views about the aggressiveness of central bank tightening with economic growth and Consumer confidence weakened. Markets have begun pricing pivotally on policy from the Fed, although inflation remains at over Four decades high.

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“We are waiting for some kind of short-term recovery because the movement has been very fast from a historical point of view,” he said Francesco SandriniHead of Multi Asset Strategies at

amondy.

But we also await the second part of the correction, the time when macroeconomic concerns feed into earnings. This is a difficult time for us as portfolio managers because we are in between these two situations.”

A well-known stagnation indicator appeared in the bond market on Wednesday morning, as the US yield curve inverted. It occurs when the short-term yields such as a two-year bond are higher than that of the long-term debt such as the 10-year bond.

The two-year Treasury yield rose to 2.961% on Wednesday, while the 10-year Treasury yield rose to 2.911%. Yields rise as bond prices fall.

In morning data releases, Demand for employment remained strong The service sector unexpectedly maintained its growth momentum.

“Over the past couple of days, the markets have dismissed some of the hawks that were expecting the Fed. The interesting thing is to see if the Fed will try to pull back in the short term.” Gergeli MajorosCarmignac, a portfolio advisor, said before the minutes were issued.

The benchmark 10-year US Treasury index peaked at 3.482% just three weeks ago but has since fallen, as growth expectations have weakened.

“I think we saw a peak 10-year return in this cycle,” said Tom Graf, Head of Investments at Facet Wealth. “The risk versus reward at the longer end of the curve is still very attractive.”

The Wall Street Journal’s Deon Raboin explains how inflation is rising and why the Federal Reserve, Congress, the president, and big companies can be held accountable. Illustration: Ryan Trevis

Oil prices fell after rising Biggest drop since March Tuesday. Global benchmark Brent crude fell 2% to $100.69 a barrel. The price of US West Texas Intermediate equivalent crude fell 1% to $98.53 a barrel after falling below $100 the previous day for the first time in nearly two months.

“When the growth outlook changes, people tend to expect the energy demand side to weaken as well, and that tends to put pressure on the oil price,” Majoros said.

Energy stocks fell 1.8% along with crude oil prices, posting the biggest losses among the S&P 500 sectors in afternoon trading. At 4 p.m. trading,

Diamondback Energy

It was among the worst performers, down 3.4%.

Offshore, the Stoxx Europe 600 continental index was up 1.7%. norwegian government Intervened to end the strike of oil workers On Tuesday evening, he threatened to cut the country’s exports of gas by more than half, a major source of energy in the region.

Cryptocurrency exchange

Coinbase Global

It was down 6.6% at 4pm trading after a rival exchange propose For regulators that would allow cryptocurrency investors to bypass brokers while trading derivatives. The instability of the digital asset ecosystem has also emerged after an intermediary Voyager Digital Limited. He said he has File for bankruptcy protectionDays after suspending withdrawals and trading on its platform.

Stocks were mixed on Tuesday, with two of the three major indexes ending in positive territory after rising late in the day.


picture:

Michael Nagel/Bloomberg News

In Asia, most major benchmarks have fallen. Shanghai Composite Index fell 1.4% Hong Kong’s Hang Seng lost 1.2%. Japan’s Nikkei 225 is also down 1.2%.

Corrections and amplifications
Francesco Sandrini is Head of Multi Asset Strategies at Amundi. An earlier version misspelled his first name as Francisco. (corrected July 6)

Write to Anna Hirtenstein at [email protected] and Eric Wallerstein at [email protected]

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