NEW YORK, New York – Stocks in the United States trimmed gains late Wednesday after minutes from last month’s FOMC meeting confirmed a majority view that interest rates must stay higher for longer, underpinning the need to get inflation under control.
“Participants generally observed that a restrictive policy stance would need to be maintained until the incoming data provided confidence that inflation was on a sustained downward path to 2 percent, which was likely to take some time,” the minutes of the December meeting said.
“In view of the persistent and unacceptably high level of inflation, several participants commented that historical experience cautioned against prematurely loosening monetary policy.”
The Standard and Poor’s 500 did best percentage-wise Wednesday, rising 28.81 points or 0.75 percent to 3,852.95.
The Nasdaq Composite gained 71.78 points or 0.69 percent to 10,458.76.
The Dow Jones industrials notched up 133.40 points or 0.40 percent to 33,269.77.
“It’s a new year, but we’re stuck with the same macro conditions, which are still pretty discouraging,” Dave Grecsek, managing director in investment strategy and research at Aspiriant told Reuters Wednesday.
“Two things that are really going to drive near-term market returns – whether Fed is going to stick to its word and be as firm with inflation and policy rates and whether the U.S. and the European economies enter recession.”
The U.S. dollar had a choppy day on Wednesday. After losing considerable ground in Asia the greenback rebounded after the Fed minutes were released. At the end of the day the euro was trading at 1.0604. The British pound was stronger at 1.2057. The Japanese yen reversed fortunes, sharply declining to 132.67.
The Swiss franc graduated to 0.9300. The Canadian dollar jumped to 1.3480. The best performer Wednesday was the Australian dollar which appreciated sharply to 0.6838 after China indicated it would start taking Australian coal once more. The New Zealand dollar rose about half a cent to 0.6295.
On overseas equity markets, London’s FTSE 100 added 0.41 percent. The German Dax was solidly higher, gaining 2.18 percent. In Paris, the CAC 40 tacked on 2.30 percent.
In Tokyo, the Nikkei 225 tumbled 1.45 percent.The Hang Seng in Hong Kong plummeted 3.22 percent. China’s Shanghai Composite was off 0.22 percent. The Singapore Straits Times lost 0.10 percent.
The Australian All Ordinaries advanced 1.65 percent. Indonesia’s Jakarta Composite dropped 1.10 percent. In New Zealand, the S&P/NZX 50 gained 1.00 percent.
South Korea’s Kospi Composite rose 1.68 percent.