Dow Jones Industrial Average is trading higher on Wednesday, ahead of the release of latest Federal Reserve minutes. The transcript from Fed’s last meeting could throw some light on whether the central bank is planning to raise interest rates next month. The Fed minutes will be released at 2 PM ET.
Besides, a number of Fed officials are scheduled to speak today. Atlanta Fed President Dennis Lockhart, Cleveland Fed President Loretta Mester and New York Fed President Bill Dudley, will all sit on a panel at the Clearing House Annual Conference in New York.
Stronger than expected earnings from retailers Target and Lowe’s also seem to have helped lift Dow Jones Industrial Average higher.
Smart Money Thinks December Hike is Coming
Investor confidence in the global economy has bounced from 3-year lows, reviving expectations that the Fed will hike rates next month, data from a widely followed survey showed yesterday.
Almost 81% of portfolio managers said they expect the Fed to raise interest rates in December. That’s a huge jump from the 47% recorded last month, Bank of America Merrill Lynch said, after surveying 200 investors managing $576B in assets.
Chinese slowdown worries also abated somewhat. Just 4% of those polled now forecast a weaker Chinese economy in the next 12 months, versus 22% in Oct.
Better than expected U.S. employment figures in Oct fueled hopes that the Fed will finally move away from near-zero rates. The U.S. added over a quarter million jobs last month.
“We’re as confident as we can be that the Fed will tighten policy on December 17,” Nigel Green, chief executive at financial adviser deVere Group, told CNBC.
Housing Starts at 7-month Low
U.S. housing starts fell to a 7-month low in Oct as construction of single-family homes tumbled in the South. But a jump in building permits ensured the housing market remained strong.
The Commerce Department said earlier this morning that housing starts dropped 11% on a month-on-month basis to a seasonally adjusted 1.06M in Oct. Economists surveyed by Reuters had projected housing starts to fall to 1.16M-unit last month. Building permit applications, considered a good indicator for future home construction, increased 4.1% to a seasonally adjusted 1.15M.
“We’re confident that the broader housing market recovery will continue,” Tom Wind, executive VP of home lending at EverBank, said after the release.
Dow Jones Industrial Average Receives Oil Boost
Dow Jones Industrial Average futures received an early boost after oil price gained on the back of falling U.S. stockpiles.
The American Petroleum Institute said Tuesday that U.S. crude inventories decreased last week by 482,000 barrels. Official inventory data from the U.S. Energy Information Administration is due at 10:30 AM ET. Investors expect crude stock to have built to 1.9M barrels in the week ended Nov 13.
Despite Wednesday’s gains, most analysts foresee prices remaining depressed for the rest of the year.
“The fundamentals are bearish,” Virendra Chauhan, analyst at Energy Aspects, noted.
Dow Jones Industrial Average was last trading around 0.3% higher at 17510.00.