By Yasin Ebrahim
Investing.com – The S&P 500 closed higher Wednesday, as investors swopped in to buy the dip in tech following weakness earlier in the session amid concerns about rising U.S. Treasury yields.
The S&P 500 rose 0.23%, but had been down nearly 1% intraday. The Dow Jones Industrial Average was down 0.03, or 9 points, and the Nasdaq gained 0.44%.
Tech turned positive to help the broader market cut losses after starting the session on the backfoot as a slew of positive economic data and signs of persistently elevated inflation stoked concerns about sooner monetary policy action from the Federal Reserve.
The Personal Consumption Expenditures price index, the Fed’s preferred inflation measure, was up 0.6% on October, below the 0.7% rate expected, but ahead of prior’s month 0.4%. That took the annualized rate for October to 5%, well above the Fed’s 2% target.
The labor market continues to show progress toward the Fed’s maximum employment goal as jobless claims fell to lowest level since 1969.
The Department of Labor reported Wednesday that 199,000 people filed for unemployment insurance, down 71,000 from the prior week's upwardly revised 271,000. That was well below consensus for claims to fall to 260,000.
Economists, however, shrugged off the huge drop in claims as a one-off, which “were pushed down by a seasonal adjustment quirk,” Pantheon Macroeconomics said. “It will substantially reverse next week, with claims rebounding to about 250K.”
Energy stocks added to recent gains even as oil prices eased following data showing an unexpected build in crude stockpiles.
Devon Energy (NYSE:DVN), Diamondback Energy (NASDAQ:FANG), Marathon Oil (NYSE:MRO) were among the biggest gainers.
Oil prices will remain in focus next week ahead of the OPEC+ meeting following threats by some members to delay plans to boost production after the U.S. and other major oil producing nations said they would tap emergency oil reserves to curb prices.
"OPEC+ could even suspend its planned production hikes for two and a half months now without causing any shortage on the oil market." Commerzbank said in a note. "Next week’s meeting will reveal whether OPEC+ will now actually increase its production to a lesser extent, as delegates have threatened."
Tesla (NASDAQ:TSLA), meanwhile, moved off session lows to helped consumer discretionary stocks pare losses following a retail-led slide.
Gap (NYSE:GPS) plunged 24% after the retailer slashed its full-year outlook following third-quarter results that fell short of Wall Street estimates as rising costs and supplier chain woes weighed.
Nordstrom (NYSE:JWN) also reported weaker-than-expected quarterly results as rising labor costs dented profit, sending its share price 29% lower.
On the monetary policy front, the minutes of the Fed's November meeting showed that some Federal Reserve policymakers were in favor of a faster pace of bond tapering to provide the central bank with plenty of room to hike rates amid concerns about inflation pressures.
In another sign that Fed members are growing concerned about inflation, San Francisco Federal Reserve Bank President Mary Daly said Wednesday that she would be open to speeding up the pace of the Fed's bond tapering if inflation remained elevated and jobs growth remained strong.