Wall Street put a seesaw day behind it to close higher on Wednesday as investors digested new clues on the US central bank's approach to rate policy and inflation fight detailed in the minutes from the latest Federal Reserve meeting.
After a brutal selloff in global equity markets in the first half of the year, nervous investors are watching on central bank actions as they try to assess the impact of aggressive rate hikes on global growth.
They got their latest data point on Wednesday afternoon when the minutes of the June 14 -- 15 policy meeting detailed how the US central bank was prompted to make an outsized interest rate increase. The minutes were a reflection of the intent of the Fed to get prices under control to address stubborn inflation and concerns about lost faith in the central bank's power. The 0.75 percentage-point rate increase that came out of the meeting was the first of its size since 1994. The minutes said that participants believed that an increase of 50 or 75 basis points would be appropriate at the policy meeting later this month.
Prior to the minutes' publication, investors had been pricing in another 75 basis-point rate increase at the upcoming July 26 - 27 gathering, meaning that both 50 basis points and 75 basis points remained on the table due to the Fed acknowledging the impact of its rate rises on the economy.
The minutes reflected their concern about rate increases having the potential for a larger than anticipated impact on economic growth.
Jason Pride, chief investment officer of private wealth at Glenmede said that people are heavily focused on the terminal rate of what the Federal Reserve'sFederal Reserve's increases are, and the 50-75 debate points towards where you end up.
He noted that a 50 basis-point hike would point toward a terminal rate of 3%, while 75 basis points indicated a peak of 3.25% or 3.5%. The likelihood of a recession is about 50% at 3.5% or above.
The markets built solid gains for the rest of the day after the 2 p.m. EDT release, despite the fact that all three Wall Street benchmarks had endured a seesaw session prior to the publication of the minutes.
The Dow Jones Industrial Average rose by 69.86 points, or 0.23%, to 31,037. 68, the S&P 500 gained 13.69 points, or 0.36%, to 3,845. The Nasdaq Composite and 08 added 39.61 points, or 0.35%, to 11,361. Eight of the 11 S&P subsectors closed higher, with utilities and technology leading the way. The energy index fell by 1.7% as crude prices fell to a 12 week low on recession fears.
Uber Technologies Inc and DoorDash Inc fell 4.5% and 7.4% in the past, after Amazon.com Inc agreed to take a 2% stake in Just Eat Takeaway.com's struggling US food delivery business, Grubhub.
Rivian Automotive Inc. gained 10.4% after the electric-vehicle maker's deliveries nearly quadrupled as it ramped up production.
The US exchanges' volume was 11.31 billion shares, compared to the 13.08 billion average for the full session over the last 20 trading days.
The S&P 500 posted 2 new 52 week highs and 29 new lows, the Nasdaq Composite recorded 20 new highs and 109 new lows.