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Stocks, oil struggle to hold ground as minutes show Fed rally around rate hikes

Economy Jul 06, 2022 04:17PM ET
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2/2 © Reuters. FILE PHOTO: South Korean won, Chinese yuan and Japanese yen notes are seen on U.S. $100 notes in this file photo illustration shot December 15, 2015. REUTERS/Kim Hong-Ji//Illustration 2/2

By Pete Schroeder

WASHINGTON (Reuters) -Wall Street ticked upward while oil continued to slide on Wednesday as investors juggled concerns over inflation versus a recession after Federal Reserve minutes showed officials rallied around a large rate hike at their June meeting.

All three major stock indices ended higher after the release of the Fed minutes, which showed officials agreeing that the inflation outlook had deteriorated and expressing concern over lost faith in the Fed's ability to stem it. The Fed at that meeting hiked rates by 0.75% for the first time since 1994.

The Dow Jones Industrial Average was up 0.22%, the S&P 500 climbed 0.36% and the Nasdaq Composite was up 0.35%.

The MSCI world equity index, which tracks shares in 45 nations, was up 0.14%.

Oil struggled to stay above $100 a barrel, dropping to a 12-week low on recession fears earlier in the trading day. In the afternoon, Brent crude ended down 2.3% at $100.40 a barrel. That comes one day after Brent fell 9% on supply concerns.

New economic data out on Wednesday showed U.S. job openings had fallen less than expected in May, suggesting the labor market remained tight and undercutting the notion that a recession was necessarily on its way.

If anything, the survey from the Institute for Supply Management (ISM) suggested the Fed may have to keep up its efforts to cool the economy and bring prices under control via rate hikes. Also on Wednesday, the U.S. Labor Department reported 11.3 million job openings at the end of May, down slightly from March's record high.

"Investors continue the tug of war between, 'Should I be more worried about high inflation or the quickly deteriorating growth outlook?'" said Thomas Kennedy, chief investment strategist for J.P. Morgan Global Wealth Management. "Cross asset correlations over the last few weeks have suggested growth is the bigger worry for the market now."

Energy concerns continued to push the dollar, perceived as a safe haven, ahead of other currencies.

The dollar index, which tracks the U.S. unit versus a basket of six currencies, surged above 107, while the euro dropped below $1.02, the first time both currencies reached those levels since December 2002. [/FRX]

Benchmark U.S. Treasury yields fell to five-week lows on Wednesday, while key parts of the yield curve remained inverted, sounding recession alarm bells.

The two-year, 10-year part of the Treasury yield curve reached minus 4 basis points, after inverting on Tuesday for the first time in three weeks, a move seen as a reliable indicator that a recession will follow in one to two years.

The two-year, five-year section, which on Tuesday inverted for the first time since February 2020, also stayed inverted.

Benchmark 10-year yields were last at 2.913%. They have fallen from 3.498% on June 14, the highest since April 2011.

"The probability of a soft landing had massively declined," August Hatecke, the co-head of UBS Wealth Management Asia Pacific, told investors at a conference in Singapore.

(Additional reporting Sam Byford in Tokyo and Tom Westbrook in Singapore; Editing by Chizu Nomiyama , Will Dunham and Emelia Sithole-Matarise)

Stocks, oil struggle to hold ground as minutes show Fed rally around rate hikes
 

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Comments (8)
Khairul Bakhtiar
Khairul Bakhtiar Jul 06, 2022 12:06PM ET
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Vague data, ill-concluded journalism...
Marco cuevas
Marco cuevas Jul 06, 2022 11:47AM ET
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Fake financial journalism should e banned seeking alpha got sued by the DOJ who's next?
Kerry Ditto
Kerry Ditto Jul 06, 2022 12:17AM ET
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USD stops its ridiculous rising. a sign of explosive booming just beginning.
Lars He
Lars He Jul 06, 2022 12:11AM ET
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The system is behaving erratic before cardiac arrest
John Avenetti
John Avenetti Jul 06, 2022 12:11AM ET
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diarrhea boom maybe
Kerry Ditto
Kerry Ditto Jul 05, 2022 11:57PM ET
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no recession. instead, on the verge of explosive boom.
John Avenetti
John Avenetti Jul 05, 2022 11:57PM ET
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An explosive diarrhea boom maybe
PS Srinivas
PS Srinivas Jul 05, 2022 11:46PM ET
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all news are managed
Brad Albright
Brad Albright Jul 05, 2022 11:46PM ET
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This is true. I was at the news manage meeting last night and all the news was there being managed. (The coffee was cold, though.)
Robert Palumbo
Robert Palumbo Jul 05, 2022 11:25PM ET
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Shows you how hard they have to work to keep stocks down. 10x a day the articles are pumped out
Brad Albright
Brad Albright Jul 05, 2022 11:25PM ET
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This is true. At the meeting last night of the globalist cabal, we decided we have to work even harder to keep stocks down. We decided we will now pump out articles 11x a day.
Jeff Chevalier
Jeff Chevalier Jul 05, 2022 11:25PM ET
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It's amazing how every one that loses money due to stupidity blames News/FED/government. If you're not good at it, DON'T do it.
Viral Patel
Viral Patel Jul 05, 2022 11:13PM ET
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Can your mf stop using recession work for god sake all i hear is recession bs
Jasmine Kumar
Jasmine007 Jul 05, 2022 11:13PM ET
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well there's always another option, the volatile market should not stop you from investing in other platform out there
 
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