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The minutes of the 3 November FOMC meeting, released on Wednesday, said that various participants noted that the Fed should be prepared to adjust the pace of the QE taper and raise rates sooner than currently anticipated should inflation continue to run hot. The minutes carried a consolidated language to pave the way ahead hawkish policy including QE withdrawal, taper and interest rate hikes.
Wall Street shares reversed earlier losses in choppy trading on Wednesday and U.S. Treasury yields hovered near highs for the year after data suggested the U.S. job market and consumer spending continued to improve.
The S&P 500 (.SPX) gained 1.73 points, or 0.04%, to 4,692.43, and the Nasdaq Composite (.IXIC) added 20.12 points, or 0.13%, to 15,795.26, while the Dow Jones Industrial Average (.DJI) fell 70.23 points, or 0.2%, to 35,743.57 by 2:07 p.m. EST (1907 GMT).
Oil prices were largely steady as investors questioned the effectiveness of a U.S.-led release of oil from strategic reserves.
European shares ended a four-day losing streak with shares of Telecom Italia (TLIT.MI) leading gains, although fears around Europe’s worsening COVID-19 situation and the prospect of severe restrictions restrained the market.
Trading was uneven after the release of minutes of the Federal Reserve’s latest meeting, held Nov. 2-3, showed that various policymakers would be open to speeding up the elimination of the U.S. central bank’s bond-buying program and move more quickly to raise interest rates if high inflation held.
Economic Data
Data showed U.S. weekly jobless claims fell to a 52-year low and third-quarter GDP growth was revised higher, while other readings showed a solid rise in consumer spending in October while consumers paid much higher prices for goods through the third quarter, as inflation continued to grow.
This could have been a relatively uneventful week as a result of tomorrow’s U.S. bank holiday, but instead, it’s been quite the opposite, as Powell’s reappointment sent shockwaves through the markets
The U.S. economy expanded at an annual 2.1% pace in Q3 instead of 2.0% according to revised government data. Economists were expecting a reading of 2.2%, according to a Wall Street Journal poll. Consumer spending and private inventory investment mostly accounted for the upward revision, the Commerce Department said Wednesday. …
Following a 7.1% (downwardly revised from 14.0%) surge in sales in September, New Home Sales in the United States rose by a modest 0.4% in October according to data released by the US Commerce Department showed on Wednesday.
US consumer spending powered ahead in October although the economy was confronted by the biggest and fastest inflation wave in 31 years, setting up the economy for a year-end growth spurt.
Purchases of goods and services, unadjusted for changes in prices, increased 1.3%, the most since March, following a 0.6% gain in September, Commerce Department figures showed Wednesday. After adjusting for higher inflation, spending rose a healthy 0.7%.
Prices in the US kept surging in October, frustrating hopes for weaker inflation and raising fresh concerns around the strength of the economic recovery.
The Personal Consumption Expenditures Price Index surged 0.6% in October, the Commerce Department said Wednesday. That came in below the median estimate of a 0.7% jump from economists.
Consumer sentiment in the United States stayed at decade-low levels in November as spiking inflation soured households’ views on both their own finances and the economy nationwide according to a survey conducted by the University of Michigan released Wednesday.
The report said the consumer sentiment index for November was upwardly revised to 67.4 from the preliminary reading of 66.8. Economists had expected the index to be upwardly revised to 66.9.
The fresh data indicates rise for the second successive month to the highest level since April amid strong demand and improved supply in recent months.
Other Developments
U.S. President Joe Biden on Monday nominated Jerome Powell for a second term as Fed chair, and named Fed Governor Lael Brainard, the other top candidate for the job, as vice chair.
The pan-European STOXX 600 index (.STOXX) climbed 0.1% after recording its worst session in nearly two months on Tuesday as earlier momentum took a hit from gloomy German business sentiment. MSCI’s gauge of stocks across the globe (.MIWD00000PUS)pared losses to trade down 0.28%.
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