Fed Minutes Might Set the Tone for the US Stock Market through Year's End

The next Federal Reserve meeting, which will set new interest rates, won't happen until mid-December.

The Fed is anticipated to raise rates by 50 basis points at the FOMC meeting in December after four consecutive rate hikes of 75 basis points.

The FOMC minutes were anticipated by markets throughout the world to reveal what the Fed officials thought about raising interest rates. Additionally, they received the information they required to support their opinions. US markets ended the session higher as a result of the Federal Reserve's most recent meeting minutes, which showed that the majority of policymakers favored soon slowing the pace of interest-rate hikes. At Tuesday's end, the Dow 30 gained 95 points, or 0.28%, the S&P 500 finished higher by 0.59%, and the Nasdaq Composite added 0.99%.

Since the beginning of 2022, the Fed has increased rates by an extraordinary 375 basis points. The Fed is anticipated to raise rates by 50 basis points at the FOMC meeting in December after four consecutive rate hikes of 75 basis points.

The minutes of the meeting, which were made public on November 23, show that some Fed officials supported the need to slow the rate hikes that took place on November 1-2, when the Fed FOMC increased the federal funds rate by 75 basis points. Because of a fall in consumer demand and tighter global economic and financial conditions, the minutes were cautious overall.

The markets went up when the Fed indicated that it might delay the rate hikes. According to Nigel Green, CEO of deVere Group, one of the biggest independent financial advising, asset management, and fintech companies in the world, "The Federal Reserve's minutes of their most recent meeting add gasoline to mounting market excitement."

The US stock market is closed today, November 24, in observance of the Thanksgiving holiday. For traders and investors, it will be a shorter week because on Friday, November 25, markets will close early in honor of Black Friday. Although the immediate beneficial effect may be somewhat tempered by lower-than-usual trade volumes due to the Thanksgiving holiday on Thursday, Green predicts that this suggestion of future rate rises will be more gradual.

The FOMC minutes, however, disclosed information that the markets already knew. This was clear from Powell's comments on November 2 concerning a slower rate of rate increases and a higher terminal rate than initially anticipated.

Now, attention may turn to the release of the US CPI statistics on December 13 and the FOMC meeting of the Fed on December 13–14. What happens in the middle of December will have a significant impact on how the US stock market ends in 2022. The Federal Reserve won't convene again until the next rate-setting meeting in mid-December, but because stock markets are forward-looking, these most recent minutes will essentially set the mood until the end of 2022, according to Nigel Green.