Stocks jumped to the highs of the day after the Federal Reserve's meeting minutes proved again that it is ready to raise interest rates at its meeting next month.
Crude oil fell below $40 per barrel.
First, the scoreboard:
- Dow: 17,694.14, +204.64, (1.17%)
- S&P 500: 2,078.24, +27.80, (1.36%)
- Nasdaq: 5,061.33, +75.31, (1.51%)
And now, Wednesday's top stories:
- December is firmly on the table for a rate hike if we don't get any really ugly economic data before then. That's the takeaway from the FOMC's latest meeting minutes released this afternoon. The important passage was, "most participants anticipated that, based on their assessment of the current economic situation and their outlook for economic activity, the labor market, and inflation, these conditions could well be met by the time of the next meeting."
- But the Fed is trying really hard to convince markets that this is the case, and the minutes suggested they had an intense debate about communication. Instead of framing the language of the October statement around how long to maintain the current target range, the Fed opted to tell markets it would hike in December if labor-market and inflation data progress towards its objectives. But some members thought that would create the impression that December was a dead giveaway, which could hurt the Fed's credibility if there's no hike.
- Crude oil tumbled below $40 per barrel for the first time since August. The drop in August was the first since 2009. West Texas Intermediate crude futures in New York fell to as low as $39.92 a barrel just before noon. Earlier, the Energy Information Administration said US crude inventories rose by 300,000 barrels last week, below the expectation for 1.9 million. Inventories at Cushing, Oklahoma, a key delivery point, rose by 1.5 million barrels, as overall stockpiles remained near levels not seen at this time of year in 80 years.
- In economic data, housing starts fell more than expected last month, amid a drop in multi-family units. In October, housing starts fell 11% at an annual rate of 1.06 million, a seven-month low. Building permits rose 4.1%, more than forecast, at an annual rate of 1.15 million. "The run in multi-family construction is likely coming to an end, but single-family building will continue to improve throughout 2016," wrote PNC's Gus Faucher in a note.
- Digital payments company Square is expected price its IPO much lower than expected. CNBC reported, citing people familiar with the matter, that the IPO could be priced lower than $11 before trading starts on Thursday morning. The company, headed by Twitter CEO Jack Dorsey, had set a price range of $11 to $13, giving it a valuation of about $4.2 billion. This was less than the valuation it had at its most recent private financing round.
- Americans are planning to splurge on Christmas gifts. A November survey by Gallup showed that adults plan to spend $830 on average on gifts this year, up from $720 last year. It's the highest indicated number since November 2007. "Regardless of whether Americans follow through with their higher spending intentions, the fact that they are in the mood to do so is a positive sign for the nation's retailers at the end of a slow year," Gallup's report said. Meanwhile, T. Rowe Price's 2015 "Parents, Kids & Money" survey found that 7% of parents with 8- to 14- year-olds dipped into retirement savings for gifts last year, and 9% drew from emergency funds. So there's that, too.
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