Wall St reverses losses as focus turns to Fed minutes

  • Fed Minutes due 2 p.m. ET
  • Job vacancies fall less than expected
  • Microsoft falls on the downgrading of the rating of UBS
  • Indices up: Dow 0.73%, S&P 1.17%, Nasdaq 1.13%

Jan 4 (Reuters) – Wall Street’s major indexes reversed their first losses on Wednesday as investors moved past a set of economic data, focusing on the minutes of the Federal Reserve’s December meeting to get clues to the outlook for interest rates.

Minutes of the Fed’s previous meeting, when it raised interest rates by half a percentage point and warned rates may have to stay higher for longer, are due at 2 p.m. ET (7 p.m. GMT).

The minutes could show that the central bank’s internal deliberations are entering a new phase where the risks to economic growth and jobs are given greater weight, while tackling high inflation remains the top priority.

“What you will hear is that the Fed needs to continue to hold the line and fight inflation … there will be back and forth between different members on where the terminal rate should land,” said said Darrell Cronk, chief investment officer at Wells Fargo Wealth and Investment Management.

U.S. jobs in November pointed to a tight labor market, allowing the Fed to continue its monetary tightening campaign for longer, while other data showed manufacturing contracted further in December.

Minneapolis Fed President Neel Kashkari on Wednesday underscored the need for continued rate hikes, setting out his own forecast that the key rate should initially stop at 5.4%.

U.S. stocks have been battered in 2022 on fears of a recession due to aggressive monetary policy tightening, with the three major stock indices posting their biggest annual losses since 2008.

Market participants see a 66.7% chance of a 25 basis point rate hike from the Fed in February and see rates peaking at 4.98% by June.

Apple Inc (AAPL.O) and Tesla Inc (TSLA.O) rebounded from a steep drop in the previous session and were up 2.3% and 5.0%, respectively.

“People repositioning their portfolios for this year are causing the market to see these gains…people are looking to names that really underperformed last year,” said Robert Pavlik, senior portfolio manager at Dakota Wealth Management. .

Meanwhile, Microsoft Corp (MSFT.O) fell 4.3% following a downgrade by brokerage firm UBS on concerns over slowing growth in its cloud services and suite. Office.

Consumer discretionary (.SPLRCD) and financials (.SPSY) stocks led the gains among the major sector S&P 500 indices (.SPX).

As of 11:52 a.m. ET, the Dow Jones Industrial Average (.DJI) was up 241.58 points, or 0.73%, at 33,377.95, the S&P 500 (.SPX) was up 44.63 points, or 1.17%, to 3,868.77, and the Nasdaq Composite (.IXIC) rose 117.59 points, or 1.13%, to 10,504.58.

Salesforce Inc (CRM.N) gained 3.4% on the enterprise software company’s workforce reduction plans.

Advancing issues outnumbered decliners for a 6.25-to-1 ratio on the NYSE and a 3.55-to-1 ratio on the Nasdaq.

The S&P index recorded two new 52-week highs and no new low, while the Nasdaq recorded 58 new highs and 39 new lows.

Reporting by Shubham Batra, Amruta Khandekar and Ankika Biswas in Bengaluru; Editing by Shounak Dasgupta

Our standards: The Thomson Reuters Trust Principles.

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