US stocks fluctuate as investors weigh Fed minutes and earnings

US stocks turned positive on Wednesday afternoon even as minutes from the Federal Reserve’s most recent monetary policy meeting showed the central bank remained committed to taking an aggressive approach to interest rate increase.

Minutes from last month’s meeting, when the central bank raised its benchmark interest rate by 0.75 percentage points, acknowledged concerns about the bleak economic outlook and said a handful of officials favored “adjusting ” the rate of interest rate increases to minimize the negative impact on the economy.

However, the minutes also highlighted policymakers’ pledge to reduce inflationwith “many” officials arguing that “the cost of taking too little action . . . is likely to outweigh the cost of taking too much action”.

Wall Street’s benchmark S&P 500 rose 0.3% shortly after the minutes were released, having previously been flat. The Nasdaq Composite, dominated by high-growth technology stocks considered particularly sensitive to higher interest rates, added 0.5%.

Treasury bond prices also rose slightly. The yield on the 10-year Treasury note, which fell as prices rose, fell 0.04 percentage points to 3.9%.

Markets struggled to find direction earlier in the day as investors reviewed hotter-than-expected U.S. manufacturers inflation data and headed for a third-quarter earnings season.

The producer price index, which tracks the prices businesses receive for their goods and services, rose 8.5% in the year to September, down from 8.7% in August but higher. 8.4% expected by economists. On a monthly basis, the prices US producers received for their goods and services rose 0.4% – well above the consensus expectation of 0.2% growth and well above the decline. 0.2% was recorded in August.

Investors have been scrutinizing inflation data for clues about how aggressively the Federal Reserve and its global peers will tighten monetary policy. Signs of still hot price growth have raised concerns that the US central bank will raise interest rates more aggressively, going so far and so fast that it causes a prolonged slowdown.

Such concerns have weighed on the stock market, with the S&P 500 in September ending its longest streak of quarterly losses since the 2008 financial crisis.

Markets are pricing in expectations that the Fed will make another three-quarter point hike at its meeting in November, following three consecutive 0.75 percentage point increases. Its current target range is 3 to 3.25%.

Wednesday’s PPI report will be followed on Thursday by a widely expected consumer price index reading for September, with economists polled by Reuters predicting an 8.1% gain. That number would mark a slight decrease in the annual inflation rate from 8.3% in August.

US earnings season kicks off in earnest this week, with Wall Street banks leading the charge. The financial statements of companies will be closely analyzed for signs of stress due to high prices and rising borrowing costs.

Reflecting the challenges companies face as they navigate an increasingly bleak economic landscape, Netherlands-based health technology group Philips issued a profit warning on Wednesday, noted that supply chain challenges were “significantly more than anticipated” in the third quarter. The group’s shares fell more than 12% after it said it expected an extended disruption, along with a “deteriorating macro environment”.

Elsewhere in stock markets, Europe’s regional Stoxx 600 index closed 0.5% lower. Hong Kong’s Hang Seng lost 0.8%.


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