Stocks close higher for a second day as the Fed signals smaller rate hikes in minutes

US stocks closed higher in a choppy session on Wednesday, as minutes from the Federal Reserve showed that the central bank plans to issue smaller rate hikes in coming months as inflation cools.

The Dow Jones Industrial Average rose 95.96 points, or 0.28%, to 34,194.06. The S&P 500 gained 0.59% to 4,027.26 and the Nasdaq Composite rose 0.99% to 11,285.32.

Shares of Nordstrom fell 4.24% after the department store chain reaffirmed its forecast. However, Nordstrom beat earnings and sales expectations in its latest results, according to Refinitiv consensus expectations. Tesla rose 7.82% after Citi upgraded the stock from selling to neutral. Deere rose 5.03% on a profit margin.

Minutes from the Fed’s November meeting indicated that the central bank sees progress in its fight against high inflation and plans to slow the pace of interest rate hikes, i.e. smaller ones through the end of this year and into 2023.

“A substantial majority of participants judged that a slowdown in the rate of growth would likely be appropriate soon,” the minutes said. “The uncertain delays and magnitude associated with the effects of monetary policy measures on economic activity and inflation were some of the reasons cited for why such an assessment was important.”

Earlier in November, the central bank approved a fourth consecutive 0.75 percentage point hike, bringing interest rates to their highest level since 2008. Economists largely expect an increase of 0.5 percentage point in December.

“What it really shows is that you have a market that is nervous about one thing and one thing only, and that is the Federal Reserve and what their view is on monetary policy,” said Art Hogan, chief market strategist at B. Riley Finance. Any news that could change the narrative around future rate hikes is important for markets, which are also dealing with low trading volume due to the shortened holiday week.

Jobless claims data came in higher than expected at 240,000 for the week ending Nov. 19, where economists polled by Dow Jones expected 225,000. The result indicates that the labor market may weaken. At the same time, however, durable goods orders for October were stronger than expected, coming in at 1%, above the expected 0.5%.

The markets are closed on Thursdays for Thanksgiving and close early on Fridays.

Lea la cobertura del mercado de hoy en español aquí.

Correction: An earlier version of this story has been corrected to indicate that Nordstrom reaffirmed his prediction.

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