Stocks up on Fed minutes on rate hikes

Investors take heart that smaller increases might happen ‘soon’

Stocks closed higher on Wall Street following the release of the minutes from the Federal Reserve’s most recent policy meeting, which showed Fed officials agreed that smaller rate hikes would likely be appropriate “soon.” The S&P 500 rose 0.6 percent Wednesday, the Nasdaq added 1 percent, and the Dow climbed 0.3 percent. Deere rose after the equipment maker reported higher earnings than analysts were expecting. Longterm Treasury yields were slightly lower. Oil prices fell, European markets closed mostly higher and Asian markets closed mixed overnight. U.S. markets will be closed Thursday for Thanksgiving and will close early on Friday. At the meeting early this month, the Fed officials expressed uncertainty about how long it might take for their rate hikes to slow the economy enough to tame inflation. At a news conference following the Nov. 1-2 meeting, Chair Jerome Powell stressed that that the Fed wasn’t even close to declaring victory in its fight to curb high inflation. Other Fed officials have signaled in recent weeks that additional hikes are still needed. Still, the minutes show Fed officials also agreed that smaller rate hikes “would likely soon be appropriate.” The central bank’s benchmark rate currently stands at 3.75 percent to 4 percent, up from close to zero in March. It has warned that it may have to ultimately raise rates to previously unanticipated levels to cool the hottest inflation in decades. Wall Street has been closely watching the latest economic and inflation data for any signs that might allow the Fed to ease up on future rate increases. Investors are worried that the Fed could slam the brakes too hard on economic growth and bring on a recession. Consumer spending and the employment market have so far remained strong points in the economy. That has helped as a bulwark against a recession, but also means the Fed may have to remain aggressive. The housing market has been slowing this year under the combination of sharply higher mortgage rates and still-rising home prices. Still, the government’s latest snapshot of the new-home market was encouraging. Sales of new U.S. homes rose in October. The average rate on a 30-year mortgage edged lower for the second time in as many weeks, though it remains more than double what it was a year ago.