Interest rate hikes could soon slow, according to the minutes of the Federal Reserve’s November meeting, after Wall Street’s main indexes ended Wednesday with solid gains.
The minutes showed a “substantial majority” of policymakers agreed it would be “soon to be appropriate” to slow the pace of interest rate hikes.
“The equity markets needed to see the recent strength continue, which is what we got from the minutes,” said Michael James, managing director of equity trading at Wedbush Securities in Los Angeles.
Since the Fed’s last meeting on November 1-2, investors have been more optimistic that price pressures have begun to ease, meaning that a smaller rate hike could ease inflation.
The Dow Jones Industrial Average rose 95.96 points, or 0.28%, to 34,194.06, the S&P 500 rose 23.68 points, or 0.59%, to 4,027.26 and the Nasdaq Composite rose 110.91 points, or 0.99%, to 11,285.32.
Trading volume was thin on Thursday ahead of the Thanksgiving holiday, with US stock markets open for half the session on Friday.
Earlier on Wednesday, a mixed bag of economic data led to a decline in the yield on the benchmark 10-year Treasury note, which helped drive stocks.
The number of Americans filing new claims for unemployment benefits rose more than expected last week and US business activity contracted for a fifth straight month in November. Consumer sentiment picked up and home sales exceeded expectations.
“I think what you’re seeing is renewed investor enthusiasm by people who see that beautiful light at the end of a very dark tunnel. And there’s so much money on the fringes that is pouring back into the markets.” and looking forward to getting back in action,” said Moej Kassam, portfolio manager at Anson Funds.
Heavyweight stocks including Amazon.com Inc and Meta Platforms Inc rose 1.00% and 0.72%, respectively.
Tesla Inc jumped 7.82%, with Citigroup downgrading the electric-vehicle maker’s stock from a “sell” rating to “neutral”.
Deere & Co climbed 5.03% after the farm equipment maker reported higher than expected quarterly profit.
Nordstrom Inc fell 4.24% as the fashion retailer cut its profit forecast amid heavy markdowns to attract inflation-wary customers.
Volume on US exchanges stood at 9.25 billion shares compared to an average of 11.6 billion for the entire session over the past 20 trading days.
Issuers outnumbered decliners by a 1.97-to-1 ratio on the NYSE; On the Nasdaq, the 1.61-to-1 ratio was in favor of the advancers.
The S&P 500 posted 21 new 52-week highs and no new lows, while the Nasdaq Composite recorded 97 new highs and 126 new lows.