US stocks swing as investors digest economic data, FOMC minutes

The S&P 500 was up a modest 0.1% in the afternoon, falling from a session high of more than 1% after minutes came in more hawkish than anticipated. The Dow Jones Industrial Average fell 0.2%, and the technology-heavy Nasdaq Composite was roughly flat.

US stocks wobbled in back-and-forth trading Wednesday as investors weighed a batch of economic data and minutes from the Federal Reserve’s December policy meeting.

The minutes indicated Fed officials were reticent an “unwarranted” easing of financial conditions could backtrack their efforts to restore price stability, while also acknowledging the need for further policy flexibility.

Policymakers set to convene again January 31-February 1 and expected to deliver the first rate increase of 2023 and eighth of the current hiking cycle at the conclusion of discussions. Last month, the Fed raised interest rates by 50 basis points, bringing total increases to its benchmark policy rate to 4.25% in 2022.

The Fed minutes are a good reminder for investors to expect rates to remain high throughout all of 2023. Bottom line is that even though we flipped the calendar, the market headwinds from last year remain.

Earlier, on Wednesday, the latest Job Openings and Labor Turnover Survey, or JOLTS, showed a 10.5 million job vacancies in November, above expectations, signaling continued labour market’s robust standing despite monetary tightening by the Fed. Meanwhile, the ISM Manufacturing PMI retreated for a second consecutive month to 48.4 in December from 49 in November, the biggest decline since May 2020.

The moves Wednesday follow a bleak start to 2023 trading as many of last year’s pressures follow investors into the new year. On Tuesday, all three major averages closed lower.

In specific market moves, Microsoft shares fell 4.9% to the lowest level since November after UBS downgraded the stock to Neutral from Buy and cut its price target by $50 to $250 over concerns about the company’s cloud-computing business, a key driver of revenue.
All eyes were on Tesla again Wednesday after shares fell 12% in the first trading day of 2023 Tuesday. It marked Tesla’s biggest drop in more than two years and erased all the recovery gains made in the final three sessions of 2022 last week. Shares rose 4.5% on Wednesday.

The electric carmaker earlier this week reported vehicle production and delivery figures for the fourth quarter that disappointed Wall Street, piling on another woe for investors already weighing concerns over production at Tesla’s China plant and CEO Elon Musk’s management of Twitter.

Shares of Alibaba Group (BABA) soared 11.7% after billionaire co-founder Jack Ma won approval from Chinese regulators to raise 10.5 billion yuan — or $1.5 billion — for subsidiary Ant Group’s consumer finance business. Other US-listed Chinese stocks also gained.

Salesforce on Wednesday announced restructuring plans that included cutting about 10% of its workforce and closing some of its offices, joining a growing list of technology companies laying off workers to cut costs after over-hiring during the post-pandemic boom in 2021. Shares advanced 3.3%.