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Wall Street closed higher on Wednesday in a choppy session of trading. Mixed signals from the labor market and manufacturing sector numbers had sent the market into slumber early in the day, but the release of the FOMC minutes saw a late rebound. All three major indexes ended in the green.
How Did the Benchmarks Perform?
The Dow Jones Industrial Average (DJI) rose 0.4% or 133.4 points to close at 33,269.77. Twenty-four components of the 30-stock index ended in positive territory, while six ended in negative.
The S&P 500 gained 0.8% or 28.83 points to close at 3,852.97. Ten of the 11 broad sectors of the benchmark index ended in positive territory. The Real Estate Select Sector SPDR (XLRE), the Communication Services Select Sector SPDR (XLC) and the Materials Select Sector SPDR (XLB) gained 2.3%, 1.9% and 1.7%, respectively, while the Energy Select Sector SPDR (XLE) fell just 0.01%.
The tech-heavy Nasdaq increased 0.7% or 71.78 points to finish at 10,458.76.
The fear-gauge CBOE Volatility Index (VIX) decreased 3.9% to 22.01. A total of 11.4 billion shares were traded on Wednesday, higher than the last 20-session average of 10.8 billion. Advancers outnumbered decliners on the NYSE by a 4.30-to-1 ratio. On Nasdaq, a 2.74-to-1 ratio favored advancing issues.
Market Dips and Rises on Economic Data and Fed Minutes
After the pre-markets opened in the green, business on Wall Street was pulled down by mixed signals from the labor market and manufacturing sector. The Institute for Supply Management reported that manufacturing PMI for December was on par with the consensus for the period at 48.4, having decreased from the 49 reported in November. This entailed that economic activity in the manufacturing sector contracted for the second consecutive month following a 29-month period of growth, thus stressing the fact that the Fed’s monetary policy tightening was coming off as planned.
However, the encouragement was shortlived as numbers reflected that the labor market remains tight per the monthly JOLTS report. Even as job openings slipped 54,000 to 10.46 million on the last day of November, they remain at a level that the Fed might infer needs further addressal. Also, data for October was revised higher to show 10.51 million openings instead of the previously reported 10.33 million, showing more growth than reported earlier.
Considering the fact that the market continues to be in a “good news is bad news” territory, resilience seen in the labor market cast a pall over trading for the day, and a late rebound was only achieved after the much-awaited minutes of the Fed December FOMC meet were released. Investors tried to interpret the deliberations between key Fed officials and were relieved to see that there was a general consensus that the pace of rate hikes had to slow down to give some breathing space to the market.
Rate hikes were not going away for the time being as inflation remains above the Fed’s target rate of 2%, but officials also acknowledged they had made significant progress over 2022 in raising rates enough to bring it down. The minutes reflected that the central bank intended to continue its fight against rising prices but also acknowledged that they needed to be flexible as they ran the risk of slowing the economy too much and were "potentially placing the largest burdens on the most vulnerable groups" through unemployment.
There were some officials who were taking hawkish stances still, though. Minneapolis Fed President Neel Kashkari said on Wednesday that the Fed should continue hiking interest rates at its next few meetings until it is sure that inflation has peaked, setting out his own forecast that the policy rate should not pause before reaching 5.4%.
"In my view, it will be appropriate to continue to raise rates at least at the next few meetings until we are confident inflation has peaked," Kashkari said, alongside noting that there was increasing evidence that price pressures were past their worst.
The market rebounded on the news, skimming the dovishness from the expected hawkish stance. The sectors that did best were real estate and communication services. Consequently, shares of Netflix, Inc. (NFLX - Free Report) and Colliers International Group Inc. (CIGI - Free Report) rose 4.9% and 1.9%, respectively. Both carry a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
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Stock Market News for Jan 5, 2023
Wall Street closed higher on Wednesday in a choppy session of trading. Mixed signals from the labor market and manufacturing sector numbers had sent the market into slumber early in the day, but the release of the FOMC minutes saw a late rebound. All three major indexes ended in the green.
How Did the Benchmarks Perform?
The Dow Jones Industrial Average (DJI) rose 0.4% or 133.4 points to close at 33,269.77. Twenty-four components of the 30-stock index ended in positive territory, while six ended in negative.
The S&P 500 gained 0.8% or 28.83 points to close at 3,852.97. Ten of the 11 broad sectors of the benchmark index ended in positive territory. The Real Estate Select Sector SPDR (XLRE), the Communication Services Select Sector SPDR (XLC) and the Materials Select Sector SPDR (XLB) gained 2.3%, 1.9% and 1.7%, respectively, while the Energy Select Sector SPDR (XLE) fell just 0.01%.
The tech-heavy Nasdaq increased 0.7% or 71.78 points to finish at 10,458.76.
The fear-gauge CBOE Volatility Index (VIX) decreased 3.9% to 22.01. A total of 11.4 billion shares were traded on Wednesday, higher than the last 20-session average of 10.8 billion. Advancers outnumbered decliners on the NYSE by a 4.30-to-1 ratio. On Nasdaq, a 2.74-to-1 ratio favored advancing issues.
Market Dips and Rises on Economic Data and Fed Minutes
After the pre-markets opened in the green, business on Wall Street was pulled down by mixed signals from the labor market and manufacturing sector. The Institute for Supply Management reported that manufacturing PMI for December was on par with the consensus for the period at 48.4, having decreased from the 49 reported in November. This entailed that economic activity in the manufacturing sector contracted for the second consecutive month following a 29-month period of growth, thus stressing the fact that the Fed’s monetary policy tightening was coming off as planned.
However, the encouragement was shortlived as numbers reflected that the labor market remains tight per the monthly JOLTS report. Even as job openings slipped 54,000 to 10.46 million on the last day of November, they remain at a level that the Fed might infer needs further addressal. Also, data for October was revised higher to show 10.51 million openings instead of the previously reported 10.33 million, showing more growth than reported earlier.
Considering the fact that the market continues to be in a “good news is bad news” territory, resilience seen in the labor market cast a pall over trading for the day, and a late rebound was only achieved after the much-awaited minutes of the Fed December FOMC meet were released. Investors tried to interpret the deliberations between key Fed officials and were relieved to see that there was a general consensus that the pace of rate hikes had to slow down to give some breathing space to the market.
Rate hikes were not going away for the time being as inflation remains above the Fed’s target rate of 2%, but officials also acknowledged they had made significant progress over 2022 in raising rates enough to bring it down. The minutes reflected that the central bank intended to continue its fight against rising prices but also acknowledged that they needed to be flexible as they ran the risk of slowing the economy too much and were "potentially placing the largest burdens on the most vulnerable groups" through unemployment.
There were some officials who were taking hawkish stances still, though. Minneapolis Fed President Neel Kashkari said on Wednesday that the Fed should continue hiking interest rates at its next few meetings until it is sure that inflation has peaked, setting out his own forecast that the policy rate should not pause before reaching 5.4%.
"In my view, it will be appropriate to continue to raise rates at least at the next few meetings until we are confident inflation has peaked," Kashkari said, alongside noting that there was increasing evidence that price pressures were past their worst.
The market rebounded on the news, skimming the dovishness from the expected hawkish stance. The sectors that did best were real estate and communication services. Consequently, shares of Netflix, Inc. (NFLX - Free Report) and Colliers International Group Inc. (CIGI - Free Report) rose 4.9% and 1.9%, respectively. Both carry a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.