The Standard & Poor’s closed higher after the Fed’s meeting minutes confirmed the focus on inflation

(Reuters) – The S&P 500 closed higher on Wednesday but below a session peak after choppy trading following the release of minutes from the Federal Reserve’s latest meeting, which showed officials focused firmly on controlling inflation even as they agreed to slow their interest. Walking speed rate.

Officials at the Federal Reserve’s Dec. 13-14 policy meeting agreed that the US central bank should continue to increase the cost of credit to control the pace of price increases, but in a gradual manner aimed at reducing risks to economic growth.

Investors have been pondering the Fed’s internal deliberations for clues about its future path. After the meeting, Federal Reserve Chairman Jerome Powell said more increases were needed, striking a more hawkish tone than investors expected at the time.

While some money managers said the minutes did not contain any surprises, the market appeared to be holding onto hopes for some signs that the Fed was considering at least easing its policy tightening.

“The market is like a kid asking for ice cream. Parents say ‘no,’ but the market keeps asking because parents have given up in the past,” said Burns McKinney, portfolio manager at NFJ Investment Group LLC in Dallas. “The market still thinks it’s going to get ice cream, not as fast as they thought before.”

McKinney pointed to the minutes for evidence of Fed officials’ concern that unjustified easing of financial conditions will complicate their efforts to combat inflation.

Dow Jones Industrial Average (.DJI) It rose 133.4 points, or 0.4%, to 33,269.77 points. Standard & Poor’s 500 (.SPX) It gained 28.83 points, or 0.75%, to 3,852.97 points. and the Nasdaq Composite (nineteenth) It added 71.78 points, or 0.69%, to 10,458.76 points.

S&P rate-sensitive technology index (.SPLRCT) It lost some ground minutes later, before ending up 0.26%. Even the banking sector (.SPXBK)which is benefiting from higher rates, pared its gains but closed up 1.9%.

energy (.SPNY) It was the weakest among S&P’s 11 major industrial sectors, closing up 0.06%, while the real estate sector (.SPLRCR) It was the strongest, closing 2.3% higher, followed by a 1.7% gain in Materials (.SPLRCM).

Also on Wednesday, Minneapolis Fed President Neel Kashkari also stressed the need for continued rate hikes, stating his expectations that the policy rate should pause at 5.4%.

“The Fed minutes are a good reminder for investors to expect rates to remain high throughout 2023. Amid a consistently strong job market, it makes sense that fighting inflation remains the name of the game for the Fed,” said Fed Chairman Mike Lowengart. Build a model portfolio at Morgan Stanley’s global investment office in New York.

“The bottom line is that even though we’ve turned the calendar around, the market headwinds from last year are still there.”

Market participants now see a 68.8% chance of a 25bp rate hike from the Fed in February, but still see rates peaking just below 5% by June. .

Earlier in the day, data showed that US employment opportunities in November indicated a tight labor market, which gave the Fed cover to stick to its tightening campaign for longer, while other data showed that manufacturing contracted further in December.

US stocks fell in 2022 due to fears of a recession due to tightening monetary policy, as the three major stock indices recorded their largest annual losses since 2008.

on the Nasdaq 100 index (.NDX) The biggest gainer was US stocks in JD.Com Inc, which rose 14.7% on hopes of a post-COVID-19 recovery in China. The biggest loser was Microsoft, which fell 4.4% after a UBS analyst downgraded the stock to “neutral” from a “buy” rating.

Advance issues outnumbered declining issues on the NYSE by a ratio of 4.30 to 1; On the Nasdaq, a ratio of 2.74 to 1 favored advanced stocks.

The S&P 500 posted five new highs in 52 weeks and no new lows; The Nasdaq Composite posted 84 new highs and 51 new lows.

11.35 billion shares traded on US exchanges, compared to an average of 10.83 billion shares for the last 20 trading days, which included some weakness in volume due to holidays.

Additional reporting by Sinad Karo and Chuck Mikolajczak in New York; Shubham Batra, Amruta Khandekar and Ankika Biswas in Bengaluru; Editing by Shonak Dasgupta and Jonathan Otis

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