Stocks ended higher on Wall Street after a day of wavering as minutes from the Federal Reserve’s last meeting of policymakers underscored how the central bank remains determined to keep rates high to crush inflation.
The S&P 500 rose 0.8% Wednesday. The Dow Jones Industrial Average rose 0.4% and the Nasdaq added 0.7%.
Stocks had rallied earlier after the government reported that the number of job openings in November was higher than expected, which bolsters hopes that the economy can avoid sliding into a protracted recession. Crude oil prices fell and Treasury yields ended lower.
The Fed raised its key short-term interest rate last month for the seventh time in 2022 and signaled more hikes to come. Still, the increase was smaller than those announced after its previous four meetings, reflecting signs that inflation, while still high, has been showing signs of easing.
The minutes from the mid-December meeting show that Fed officials remained determined to keep rates high and have taken little comfort from inflation’s decline from a peak of 9.1% in June to 7.1% in November.
Stocks lost some of the gains they picked up before the 2 p.m. Eastern release of the Fed meeting minutes. The S&P 500 was up 0.7% as of 3:08 p.m. The benchmark index had been up 0.9% shortly before the release of the Fed minutes. It had been down 0.2% in the early going.
The Dow Jones Industrial Average briefly shed all its gains then rose 69 points, or 0.2%, to 33,202. The Nasdaq composite was up 0.6% after giving up most of a 0.9% gain before the release of the Fed report.
Small company stocks outpaced the broader market, lifting the Russell 2000 index 1.1% higher.
The yield on the 10-year Treasury, which influences mortgage rates, fell to 3.71% from 3.75% late Tuesday. The yield on the two-year Treasury slipped to 4.37% from 4.38%.
Stocks rallied prior to the Fed minutes report after the government reported that the number of job openings in November was higher than expected. While that could maintain pressure on the Fed to keep interest rates high to fight inflation, the resilience in the labor market also bolsters hopes on Wall Street that the economy can avoid sliding into a protracted recession.
“I think the market is trying to figure out if the recession indeed comes, will it be a bad one,” said Jeffrey Roach, chief economist for LPL Financial. “I think investors are right, that if we do fall into a recession, it’s not going to be a deep and prolonged recession.”
The latest update on job openings is the first set of employment data that Wall Street will get this week. The government will release its weekly unemployment report on Thursday and its closely watched monthly employment report, for December, on Friday.
The strong jobs market helped insulate a weakening economy from slipping into a recession in 2022. The Fed, though, is trying to lower inflation with its rate increases and that also means it needs to cool employment. While healthy employment is normally good for the broader economy, it raises the risk that the Fed’s battle against inflation could wound the economy enough that it falls into a recession.
The minutes from the central bank's last policy meeting shows Fed officials suggested that a continuing streak of robust hiring could keep inflation elevated and was a key reason why they expected to raise interest rates this year more than they had previously forecast.
The Fed's benchmark lending rate stands at a range of 4.25% to 4.5%, up from close to zero following seven increases last year. It forecast that the rate will reach a range of 5% to 5.25% by the end of 2023 and it isn’t calling for a rate cut before 2024.
Banks, companies that rely on consumer spending and communication services stocks helped lift the market. Citigroup rose 2.4%, Starbucks added 3.8% and Netflix gained 5.4%.
Energy stocks fell as the price of U.S. crude oil settled 5.3% lower. Chevron was off 1.4%.
The latest updates for the job market comes amid more layoffs within the technology sector, which has been dealing with falling demand as inflation squeezes consumers.
Investors cheered several companies that decided to make cuts to their workforces as they face weaker demand. Cloud computing software company Salesforce rose 3.9% after it announced it is laying off about 10% of its workforce. Video hosing platform Vimeo rose 4.7% after reportedly notifying workers about job cuts.
Coinbase jumped 11.5% following the announcement of a $100 million settlement with New York State over what regulators called failures in the cryptocurrency trading platform’s systems for spotting possible criminal activity.
GE Healthcare Technologies climbed 4.8% in its market debut. General Electric, which spun off the company, rose 5%.
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