U.S. stock markets closed higher on Wednesday. Market participants absorbed the June FOMC minutes of the Fed in which the central bank firmly reiterated its stance to combat inflation at any cost. Investors also watched mixed economic data. All three major stock indexes ended in green.

How Did The Benchmarks Perform?

The Dow Jones Industrial Average (DJI) rose 0.2% to close at 31,037.68.  Notably, 12 components of the 30-stock index ended in positive territory while 18 in red. The tech-heavy Nasdaq Composite finished at 11,361.85, gaining 0.4% due to strong performance of large-cap technology stocks.

The largest gainer of the tech-laden index was Lucid Group Inc. (LCID Quick QuoteLCID - Free Report) , shares of which surged 5.8%. Lucid Group carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The S&P 500 advanced 0.4% to end at 3,845.08. Seven out of 11 broad sectors of the benchmark index closed in positive zone while four ended in red. The Utilities Select Sector SPDR (XLU) gained 1% while the Energy Select Sector SPDR (XLE) tumbled 1.7%.

The fear-gauge CBOE Volatility Index (VIX) was down 2.9% to 26.73. A total of 11.31 billion shares were traded Wednesday, lower than the last 20-session average of 13.08 billion. The S&P 500 registered 2 new 52-week highs and 29 new 52-week lows. the Nasdaq Composite saw 20 new 52-week highs and 109 new 52-week lows.

Fed’s June FOMC Minutes

The Fed clearly said in its June FOMC that it will not hesitate to implement tighter monetary control to control a record-high inflation. “Participants concurred that the economic outlook warranted moving to a restrictive stance of policy, and they recognized the possibility that an even more restrictive stance could be appropriate if elevated inflation pressures were to persist.” the FOMC stated.

Fed officials unanimously decided to hike the benchmark lending rate by another 50 to 75 basis points in July. Per the FOMC, “In discussing potential policy actions at upcoming meetings, participants continued to anticipate that ongoing increases in the target range for the federal fund.”

According to the “dot plot” – which gives individual Fed members expectations – shows that the median value of the benchmark interest rate to go up to 3.4% at the end of 2022 compared with 1.9% projected in March FOMC.

Fed Chairman has reiterated his commitment to fight inflation aggressively to bring it down near to the central bank’s targeted 2% without forcing the economy to go into a recession. However, the Fed cut its outlook for 2022 GDP growth to 1.7% from 2.85 in March. Unemployment rate, which is currently at 3.6% is expected to climb to 4.1% in 2024. The Fed fund rate to rise to 3.8% at the end of 2023.

The projection for the PCE price index – Fed’s favorite gauge of inflation – raised to 5.25 from 4.35 in March. The core PCE inflation has uplifted to 4.3% from 4.1% in March. However, PCE and core PCE inflation are expected to come down to 2.6% and 2.7%, respectively, in 2023.

Economic Data

The Institute of Supply Management reported that its services index fell to 55.3% in June from 55.9% in May. June’s reading was the lowest in two years although it surpassed the consensus estimate of 54%. Notably, any reading above 50% means expansion in services sectors.

However, the new order subindex fell 0.2% to 55.6%, marking its 16-month low level. The subindex for employment fell 2.8% in June to 47.4%, reflecting the lowest reading in almost two years. The prices-paid subindex declined for the third month in a row to 82.2% in June from 85.6% in May.

The Department of Labor reported that there were 11.3 million job openings at the end of May compared with 11.7 million at the end of April and 11.9 million at the end of March. However, the metric remained elevated at late 2021 level. Moreover, around 4.3 million people voluntarily left their jobs in May, remained flat with April and slightly below from 4.4 million in March.