Investors are always eager to get a look at the minutes from the Federal Reserve’s most recent policy meetings. They scour every line and often every punctuation mark, for any sign of a shift in thinking. They might be disappointed later on Wednesday when the minutes of the Federal Open Market Committee’s September meeting hit the wire.
The Associated Press has the story:
Wall Street edges higher as Treasury yields mostly ease
U.S. stocks are drifting higher Wednesday with yields mostly easing in the bond market, which has been the main driver of Wall Street’s moves recently. The S&P 500 was 0.4% higher in early trading Wednesday. The Dow was up 136, and the Nasdaq composite was up 0.6%. Wall Street has been mostly struggling since the summer as longer-term yields shoot higher in the bond market, weighing on prices for all kinds of investments. Some relief has come this week, and yields have regressed after officials at the Federal Reserve suggested they may be done raising their main overnight interest rate.
Wall Street pointed slightly higher early Wednesday as falling bond yields continued to take pressure off stocks.
Futures for the S&P 500 and the Dow Jones Industrial Average each rose about 0.3%.
Investors have taken heart from signs that upward pressure on inflation in many economies may be easing. That would enable the Federal Reserve and other central banks to halt or reverse aggressive interest rate hikes meant to curb rising prices.
However, reports this week on inflation at both the consumer and wholesale levels could alter those assumptions.
On Tuesday, some of the strongest action was in the bond market, where Treasury yields eased after trading resumed following a holiday on Monday. It was the first opportunity for yields to move since the weekend’s surprise attack by Hamas on Israel injected caution into global markets.
It also was the first trading day for Treasurys since speeches by Federal Reserve officials that traders took as a suggestion the Fed may not raise its main interest rate again. The comments helped U.S. stocks swing from early losses to gains on Monday.
The yield on the 10-year Treasury has fallen to 4.56% from 4.80% late Friday, which is a considerable move for the bond market. The two-year Treasury yield, which moves more closely with expectations for the Fed’s actions, sank to 4.96%. It was 5.09% on Friday.
Treasury yields had jumped last week to their highest levels in more than a decade, following the lead of the Fed’s main interest rate, which is at heights unseen since 2001. They’ve been the main reason for the stock market’s stumbles since the summer, as worries rise that the Fed will keep its federal funds rate at a high level for longer than Wall Street hopes.
High rates and longer-term yields knock down prices for stocks and other investments, while slowing the economy in hopes of undercutting high inflation.
It did not stop a megadeal in the oil patch, however.
Exxon Mobil said Wednesday that it will buy Pioneer Natural Resources in an all-stock deal valued at $59.5 billion. It’s Exxon’s largest buyout since acquiring Mobil two decades ago and creates a colossal fracking operator in West Texas.
Exxon shares slipped a little more than 2% before the bell. Pioneer rose just less than 2%, but had already jumped around 9% on reports late last week that a deal was imminent.
The deal with Pioneer Natural expands Exxon’s presence in the Permian basin, which straddles the border of Texas and New Mexico.
Exxon has been flush with cash after posting record annual profits of $55.7 billion in 2022.
In Europe at midday, Germany’s DAX was little changed, while Paris’s CAC 40 fell 0.5%. Britain’s FTSE 100 added 0.2%.
In Hong Kong, investor sentiment got a boost Wednesday from a report by Bloomberg, citing unnamed sources, that the government is considering boosting spending on construction to support the economy.
China’s lackluster recovery from the blows to its economy during the COVID-19 pandemic has weighed heavily on regional and global growth.
The Hang Seng in Hong Kong added 1.3% to 17,893.10 and the Shanghai Composite index edged up 0.1% to 3,078.96.
Tokyo’s Nikkei 225 index climbed 0.6% to 31,936.51.
In South Korea, the Kospi jumped 2%, to 2,450.08 after Samsung Electronics reported improved quarterly earnings. Samsung’s shares surged 3%, while SK Hynix’s were up 0.9%. Analysts say the worst of the post-pandemic contraction in demand for computer chips and electronic devices may be over.
Australia’s S&P/ASX 200 advanced 0.7% to 7,088.40. In India, the Sensex added 0.7% and in Bangkok the SET was up 1.4%.
In other trading, a barrel of U.S. crude gave up 33 cents to $85.64 per barrel in electronic trading on the New York Mercantile Exchange. It fell 41 cents to settle at $85.97 on Tuesday, giving back a bit of its $3.59 leap a day earlier due to the fighting in the Middle East.
Brent crude, the international standard, shed 24 cents to $87.41 per barrel.
The U.S. dollar fell to 148.70 Japanese yen from 148.72 yen. The euro came down to $1.0601 from $1.0608.
On Tuesday, the S&P 500 gained 0.5% and the Dow rose 0.4%. The Nasdaq composite climbed 0.6%.
