NEW YORK: Wall Street’s major indices closed higher after a choppy session on Wednesday (Oct 11) with the release of minutes from the US Federal Reserve’s (Fed) last meeting showing caution among policy makers that helped fuel investor hopes that rates would stay steady.
The Dow Jones Industrial Average rose 65.57 points, or 0.19%, to 33,804.87, the S&P 500 gained 18.71 points, or 0.43%, to 4,376.95 and the Nasdaq Composite added 96.83 points, or 0.71%, to 13,659.68.
Fed officials pointed to uncertainties around the economy, oil prices and financial markets as supporting “the case for proceeding carefully in determining the extent of additional policy firming that may be appropriate”, according to the minutes released on Wednesday from the Sept 19-20 meeting.
Trading was choppy on Wednesday with all the indices starting off the session with gains before turning lower ahead of the minutes and then regaining lost ground to push higher.
Along with recent moves in interest rates and dovish comments from Fed officials in the last few days, Angelo Kourkafas, senior investment strategist at Edward Jones, said the minutes appeared encouraging for investors.
“Today’s release highlights the risk of over-tightening, and knowing what has happened over the past three weeks with interest rates, that provides some comfort to investors that we’re not going to see another rate hike,” said Kourkafas.
But he noted that upcoming Fed decisions will take into account consumer price index readings for September, due out on Thursday before market open, as the Fed’s “data dependence hasn’t gone away”.
Earlier on Wednesday, data showed that US producer prices increased more than expected in September amid higher costs for energy products, but underlying inflation pressures at the factory gate continued to moderate.
The energy index fell 1.4% and was the weakest among the S&P's 11 major industry sectors. It was dragged down by a 3.6% slump in ExxonMobil shares after the oil and gas producer agreed to buy rival Pioneer Natural Resources in an all-stock deal valued at US$59.5 billion. Pioneer shares closed up 1.4%.
The biggest gainers were rate sensitive sectors, real estate , which added 2% and utilities which finished up 1.6% as Treasury yields fell.
USTreasury yields on benchmark 10-year notes fell to a roughly two-week low, as prices rose on safe-haven flows as a war in the Middle East still raged after a deadly weekend attack by Hamas on Israel.
Scuffing Wednesday’s mood was the latest initial public offering (IPO). Birkenstock Holding shares closed down 12.6% at US$40.20. In its first day trading on the New York Stock Exchange the German footwear company’s shares never touched their IPO price of US$46, which valued the company at about US$8.6 billion
The decline in its stock price values the company at closer to US$7.5 billion.
“The truth is we didn’t have ‘the Barbie moment’. Barbie had the ‘Birkenstock moment’,” quipped chief executive Oliver Reichert on CNBC, as he described the company as a “purpose” brand shortly before the debut. – Reuters, AFP
Source: The Sun Daily
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