The Dow rose 250 points as Powell predicted a small interest-rate hike ahead

What drives the markets?

US stocks closed the month slightly positive as traders assessed a speech by Federal Reserve Chairman Jay Powell, suggesting the central bank may decide to slowly raise interest rates at its next policy meeting.

“The timing of rate hikes may come as soon as the December meeting,” Powell told the Brookings Institution.

He said the final level of the Fed’s benchmark rate should be higher than expected a few months ago, and he tried to take any rate talks off the table.

watch out Powell said the pace of interest-rate hikes could slow as soon as the December meeting.

“Powell will have to talk tough, but he has given Wall Street reason for hope,” said David Russell, vice president of market intelligence at TradeStation Group. “Everybody knows that price increases take time to work and we’re seeing their effects as the labor market cools.”

“We’ve seen improvement in the CPI, and even Powell expects downward pressure as commodity prices ease. Powell confirmed what the market knew and made some adjustments to the forecasts for the next month. This could cause investors to look through the glass halfway through the end of the year,” Russell said in an emailed comment.

Data released Wednesday morning showed that U.S. job openings fell to 10.3 million in October, another sign the labor market is cooling as the economy softens, but the cooling may not be enough to satisfy the Fed. Job listings fell by 10.7 million in September, according to the Labor Department.

ADP said on Wednesday that the private sector added 127,000 jobs in November. Economists polled by the Wall Street Journal had expected an average increase of 190,000. In other data, the third-quarter gross domestic product figure was revised up to a 2.9 percent annual increase, versus the initial estimate of 2.6 percent.

The Fed Beige Book report is due at 2pm Eastern.

The S&P 500 index, a measure of U.S. equities, has lost 17% this year, after the Fed quickly raised borrowing costs to 3.75% to 4% in November, effectively zero in March.

Read: The Fed’s rate hike cycle has never caught stocks off guard before. Here’s what’s special this time.

The personal consumption expenditure index, one of the Fed’s most closely watched inflation measures, will be published on Thursday, followed by the monthly employment report from the US Labor Department on Friday.

Ipek Ozkardeskaya, a senior analyst at Swiss Quotation Bank, argued that regardless of what the upcoming data shows, stocks may find it difficult to gain much in the short term.

Strong economic data, such as strong growth and strong jobs, means the Fed will continue its aggressive tightening and could result in relatively high terminal rates. That’s bad for stock prices. And soft inflation numbers and easing spending are good for Fed expectations, but they increase the chances of a recession, which is obviously not good for stock prices either,” she said in a morning announcement.

“Consequently, we have reached the last peak of the S&P 500 Rally, and the 200-day moving average, which stands around 4050, which coincides with the top of the yearly descending channel, should signal the end of the move. Expecting further declines to the 3400 mark.” The last bear rally. I’m sorry,” Ozkardeskaya concluded.

Elsewhere, markets continued to rally in China after protests against zero-covid led to a sharp sell-off on Monday. Hong Kong’s Hang Seng Index HSI;
+2.16%
It jumped 2.2% on Wednesday, marking a monthly gain of more than 25%, the biggest one-month percentage gain since 1998, according to Dow Jones Market Data.

Despite the new Chinese manufacturing news, concerns about the impact of that country’s COVID restrictions on the global economy appear to have died down for now, allowing investors to focus on a topic that has been moving stocks all year: the direction of the Federal Reserve’s monetary policy. .

Companies focus

• Dow component shares The Walt Disney Company
  DIS,
  +2.14%
  The entertainment conglomerate fell 0.5% after newly appointed CEO Robert Iger said he expected to implement organizational and operational changes to meet the board’s goal of increasing profitability and that the move would result in an impairment charge.

• Crowdstrike Holdings Inc.
  CRWD,
  -16.30%
  The cyber security company fell 19.8% after it said new bookings came in below expectations amid macro headwinds and a longer customer buying cycle.

• Hormel Foods Corporation
  HRL,
  -3.30%
  Shares fell 4.8% after the meat and food products company raised its fiscal fourth-quarter profit forecasts, but fell short on sales and downbeat outlook.

• Biogen Inc. stock BIIB,
  +5.72%
  The company’s experimental Alzheimer’s drug rose 3.6 percent after the release late Tuesday of a new study by Japan’s Esai that showed it modestly slowed cognitive decline after a year and a half.

• Hewlett Packard Enterprise Company
  HPE,
  + 6.38%
  The stock rose 4 percent after the company reported quarterly results that were in line with analyst estimates and gave strong revenue guidance.

• Some of China’s most popular stocks continued to rally on Wednesday. Shares of Alibaba Group
  BABA,
  + 10.53%
  8.5% up, the search giant Don’t go Inc.
  beginning,
  +8.16%
  Up to 6.6%, and streaming video platform Bible Inc.
  were,
  + 11.92%
  It grew to 8.2 percent.

– Jamie Chisholm contributed to this article.