Fed minutes reveal cautious approach
The Federal Reserve’s minutes from its October 31-November 1 meeting showcased policymakers grappling with conflicting signals. Ultimately, they agreed to exercise caution and maintain the Fed funds target rate at 5.25% to 5.50%. Ghriskey added, “The minutes confirm the statement from the last meeting and (Chairman Jerome) Powell’s news conference afterward that the Fed is likely on hold for now. If inflation reaccelerated, they would likely have to act, but absent that, we’re in a period of higher-for-longer rates, and we take them at their word for that.”
Existing home sales plummet as mortgage rates rise
The economic front reveals a significant decrease in existing home sales, reaching their lowest point in over 13 years. Rising mortgage rates and limited inventories have dissuaded potential homebuyers from entering the market.
The Dow Jones Industrial Average experienced an 84.7 point decline, equal to 0.24%, closing at 35,066.34. Similarly, the S&P 500 lost 10.5 points, or 0.23%, closing at 4,536.88. The tech-heavy Nasdaq Composite took the biggest hit, dropping 87.66 points, or 0.61%, closing at 14,196.87.
European stocks closed with a nominal decrease as banking stocks weighed down the market. The pan-European STOXX 600 index experienced a 0.09% decline, while MSCI’s global stocks gauge slipped by 0.18%. However, emerging market stocks saw an increase of 0.26%. In Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan closed 0.43% higher, while Japan’s Nikkei saw a 0.10% decline.
Benchmark Treasury yields wavered, initially dropping after the TIPS auction but then stabilizing after the release of the Fed minutes. The 10-year notes were last priced to yield 4.4218%, while the 30-year bond’s yield was 4.586%.
The U.S. dollar slightly rose against a basket of world currencies due to increasing expectations that the central bank will introduce rate cuts in early 2024. The dollar index grew 0.14%, with the euro declining by 0.24% to $1.0912. The Japanese yen strengthened by 0.01% against the dollar at 148.36, while the pound traded at $1.2537, experiencing a 0.26% increase.
Gold prices surged to a two-week high, briefly surpassing the $2,000 per ounce mark. This increase can be attributed to expectations that the Federal Reserve has concluded its tightening cycle. Ghriskey noted, “Gold’s been in a bit of a rally, and part of that is geopolitical concerns and investors looking for a safe haven.”