Dow Rises as Investors Buy the Dip Following Fed Minutes

By Yasin Ebrahim

The Dow Jones Industrial Average closed higher on Wednesday after fluctuating between gains and losses, as investors analyzed the Federal Reserve’s December meeting minutes. These minutes indicated a potential for sustained high-interest rates, alongside new data revealing a tight labor market that raised concerns about inflation driven by wage increases.

The Dow rose by 0.4%, gaining 133 points, while the S&P 500 increased by 0.69%, and the Nasdaq Composite climbed by 0.74%.

The meeting minutes reflected the Fed members’ preference for a prolonged "restrictive policy stance" until inflation consistently moves towards a target of 2%, which they indicated could take considerable time to achieve.

The latest job openings report from the U.S. Labor Department showed that November job openings decreased to about 10.5 million, a decline that was less severe than the anticipated 10.0 million. Jefferies noted that the report was robust, cautioning that without a significant drop in labor demand, the Fed would remain hesitant to pause or cut interest rates.

Meanwhile, U.S. Treasury yields were lower, but banking stocks remained steady as investors looked ahead to the upcoming quarterly earnings season. Analysts at Wedbush expressed optimism about the fourth-quarter earnings for most banks, citing higher interest rates and solid loan growth, although they warned that positive trends might begin to wane.

In the financial sector, companies like Citigroup Inc., SVB Financial Group, and Zions Bancorporation led the list of gainers.

In consumer discretionary stocks, Tesla Inc. rebounded by 5% following a 12% drop the previous day, while Bath & Body Works saw a notable 10% increase after receiving a price upgrade from an analyst.

Leisure stocks also attracted attention, particularly in the cruise sector, after Carnival announced plans to increase prices for U.S. and European guests starting April 1. Carnival Corporation’s stock rose by 9%, and Royal Caribbean Cruises and Norwegian Cruise Line Holdings saw gains of over 8% and 5%, respectively.

Conversely, Microsoft Corporation’s stock dropped by almost 5% after UBS downgraded it from buy to neutral, citing challenges in demand for its office and cloud services.

Despite this, semiconductor stocks, led by Micron Technology, provided some support for the tech sector. Micron shares surged over 7% after positive comments from analysts regarding expectations for higher memory prices, driven by projected demand recovery in the latter half of the year.