Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., September 11, 2023. Portal/Brendan McDermid/File Photo Acquire License Rights
- Fed minutes show cautious policymakers
- Birkenstock closes 12.6% below IPO price on debut
- Producer prices rise in September due to higher energy costs
- The US key interest rate may need to be raised further – Bowman from the Fed
- Indices rise: Dow 0.19%, S&P 0.43%, Nasdaq 0.71%
Oct 11 (Portal) – Major Wall Street indexes closed higher after Wednesday’s choppy session. The release of minutes from the Federal Reserve’s latest meeting showed policymakers’ caution, helping to fuel investor hopes for stable interest rates.
Fed officials noted that uncertainties surrounding the economy, oil prices and financial markets “support the case for a careful approach in determining the amount of additional monetary policy tightening that may be appropriate,” it said in the am Wednesday from September 19th to 20th published minutes.
Trading was choppy on Wednesday. All indices started the session with gains before declining near the start of the session and then regaining lost ground to push higher.
Angelo Kourkafas, senior investment strategist at Edward Jones, said the minutes looked encouraging for investors given recent interest rate moves and dovish comments from Fed officials in recent days.
“Today’s release highlights the risk of too much tightening and knowing what has happened with interest rates over the last three weeks gives investors comfort that we will not see another rate hike,” Kourkafas said.
However, he noted that the Fed’s upcoming decisions will take into account the September consumer price index (CPI) readings, which are scheduled to be released on Thursday before the market opens, as the Fed’s “reliance on data has not disappeared.”
Earlier on Wednesday, data showed that U.S. producer prices rose more than expected in September due to higher costs for energy products, but underlying inflation pressures continued to ease at the factory gate.
The Dow Jones Industrial Average (.DJI) rose 65.57 points, or 0.19%, to 33,804.87, the S&P 500 (.SPX) rose 18.71 points, or 0.43%, to 4,376.95 and the Nasdaq Composite (.IXIC) rose 96.83 points, 0.71%, to 13,659.68.
The energy index (.SPNY) fell 1.4%, the weakest among the S&P’s 11 major industrial sectors. Prices were hit by a 3.6% plunge in shares of Exxon Mobil (XOM.N) after the oil and gas producer bought rival Pioneer Natural Resources (PXD.N) in an all-stock deal deals worth $59.5 billion. Pioneer shares closed up 1.4%.
The biggest gainers were interest rate-sensitive sectors, real estate (.SPLRCR), which rose 2%, and utilities (.SPLRCU), which rose 1.6% on falling Treasury yields.
Benchmark U.S. 10-year Treasury yields fell to a roughly two-week low as prices rose on safe-haven inflows as war still raged in the Middle East following a deadly weekend Hamas attack on Israel.
Israel continued to bomb the Gaza Strip with retaliatory air strikes, killing scores of civilians, while it formed an emergency unity government on Wednesday and its army said it had killed three Hamas militants.
The mood on Wednesday was dampened by the recent initial public offering (IPO). Shares of Birkenstock Holding (BIRK.N) closed down 12.6% at $40.20. On their first day of trading on the New York Stock Exchange, the German shoe company’s shares never reached their IPO price of $46.
Drugmaker Eli Lilly (LLY.N) rose 4.5% after Danish rival Novo Nordisk’s (NOVOb.CO) Ozempic’s early success in a kidney failure treatment trial, while dialysis company DaVita (DVA. N) and Baxter International (BAX.N) fell 16.7% and 12.3%, respectively.
On the NYSE, advancing issues outnumbered declining ones by a ratio of 1.65 to 1; On the Nasdaq, a ratio of 1.19 to 1 favored the decliners.
The S&P 500 recorded 12 new 52-week highs and 10 new lows; The Nasdaq Composite posted 44 new highs and 206 new lows.
On U.S. exchanges, 10 billion shares changed hands, compared with the average of 10.7 billion over the past 20 sessions.
Reporting by Shashwat Chauhan and Ankika Biswas in Bengaluru; Edited by Arun Koyyur and Shounak Dasgupta
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