Stocks rose and interest rates fell Wednesday as investors digested key jobs and manufacturing data ahead of the release of the Federal Reserve meeting minutes.
The Dow Jones Industrial Average rose 198 points (0.60%), reversing its previous decline. The S&P 500 and Nasdaq Composite also recovered losses, up 1.05% and he 0.95% respectively.
The November Jobs and Labor Turnover Report (JOLTS) was slightly better than expected, suggesting the labor market remains strong as the central bank hikes interest rates to keep inflation in check. Conversely, the ISM Manufacturing Index shows the sector contracting after 30 months of expansion, suggesting higher interest rates may be slowing the economy.
That data, along with reports from Europe that inflation is declining, sent stocks higher. Still, gains could be capped as investors wait for more clarity on the state of the economy, including Wednesday’s Fed meeting minutes and Friday’s December jobs report.
“It’s very much a wait-and-see mode,” said Art Hogan, chief market strategist at B. Riley Financial. “After wrapping up a year that has been pretty bad on all fronts, investors are constantly terrified of putting their money into action and they are seeing it in real time for at least the first two trading days.”
U.S. stocks started 2023 weaker on Tuesday as rising interest rate concerns, high inflation and fears of a recession dashed hopes that Wall Street could start the new year positively. The S&P 500 and Nasdaq Composite fell 0.4% and 0.8% respectively, with the Dow just below breakeven. The plunge in Apple and Tesla shares also weighed on major indexes.
“Restrictive policies and recession fears remain at the heart of investors, and U.S. stocks have failed to sustain their previous rally,” Oanda senior market analyst Ed Moya said in a note to clients on Tuesday. I pointed out. “Discount buying triggered another bear market rally that didn’t last very long.”