Wall Street ends higher; Treasury yields hold near highs after Fed minutes

By Chris Prentice and Huw Jones

WASHINGTON/LONDON (Reuters) - Wall Street shares finished higher in choppy trading on Wednesday ahead of the U.S. Thanksgiving holiday as U.S. Treasury yields hovered near the year's highs.

Oil prices were largely steady as investors questioned the effectiveness of a U.S.-led release of oil from strategic reserves. [O/R]

European shares ended a four-day losing streak with shares of Telecom Italia leading gains, although fears around Europe's worsening COVID-19 situation and the prospect of severe restrictions restrained the market. [.EU]

Unofficially, the Dow Jones Industrial Average fell 0.02% to end at 35,807.48 points, while the S&P 500 gained 0.23%, to 4,701.54. The Nasdaq Composite climbed 0.44%, to 15,845.23.

Nvidia rallied 2.9% as it bounced back from a selloff in Big Tech stocks early this week, helping to offset losses in retailers. Nordstrom tumbled 29% and Gap shed 5.7% following disappointing earnings.

Various Federal Reserve policymakers said they would be open to speeding up elimination of the U.S. central bank's bond-buying program and move more quickly to raise interest rates if high inflation held, minutes of the Fed's last policy meeting showed.

Earlier data showed U.S. weekly jobless claims fell to a 52-year low and third-quarter GDP growth was revised higher, while other readings showed a solid rise in consumer spending in October while consumers paid much higher prices for goods through the third quarter, as inflation continued to grow.

"This could have been a relatively uneventful week as a result of tomorrow's U.S. bank holiday, ... but instead, it's been quite the opposite, as Powell's renomination sent shockwaves through the markets," said Craig Erlam of OANDA in a market note.

U.S. President Joe Biden on Monday nominated Jerome Powell for a second term as Fed chair, and named Fed Governor Lael Brainard, the other top candidate for the job, as vice chair.

The pan-European STOXX 600 index climbed 0.1% after recording its worst session in nearly two months on Tuesday as earlier momentum took a hit from gloomy German business sentiment. The MSCI world equity index, which tracks shares in 49 nations, rose 0.1 point, or 0.01%.

Germany's Ifo index of business sentiment in November was 96.5, compared with a Reuters consensus forecast of 96.6, helping to send the DAX Germany blue chip index down 0.6%.

November was the fifth month running of falling German business morale, blamed on supply bottlenecks in manufacturing and a spike in coronavirus infections, raising the prospect that Europe's biggest economy could stagnate in the fourth quarter.

"It was slightly below what the market has been forecasting, which is not surprising considering the high corona numbers and the low percentage of vaccinated people," said Rene Albrecht, a rates analyst at DZ Bank.

Emerging markets stocks fell 0.18%. MSCI's broadest index of Asia-Pacific shares outside Japan fell 1.31 points or 0.2%.

 

Graphic: Dollar rises as Fed rate speculation mounts - https://fingfx.thomsonreuters.com/gfx/mkt/zjpqkwzyxpx/Fed.PNG

 

CRUDE GOES FLAT

In commodities, Brent crude settled down 6 cents, or 0.07%, at $82.25 a barrel, while U.S. crude futures were down 11 cents, or 0.14%, at $78.39.

Gold prices slipped to a three-week low as robust U.S. economic data lifted the dollar and Treasury yields, with jitters around a sooner-than-expected interest rate hike from the Federal Reserve adding to the downbeat mood.

The greenback's strength makes bullion more expensive to holders of other currencies. Spot gold dropped 0.07% while U.S. gold futures GCv1 settled flat at $1,784.30 per ounce.[GOL/]

The U.S. dollar continued its upward trend on renewed bets the Fed will hike rates to tame inflation. The dollar index rose 0.34% after touching a 16-month high.

In Treasuries, benchmark 10-year notes rose in price to yield 1.6393%, while prices of 2-year notes last fell to yield 0.6457%. [US/]

The Turkish lira remained under pressure, falling 5.72%, compounding its historic nosedive on Tuesday as President Tayyip Erdogan defended recent rate cuts even as inflation soars and vowed to win his "economic war of independence."

 

Graphic: Lira slumps dramatically as crisis gathers momentum - https://graphics.reuters.com/TURKEY-LIRA/klpykdrakpg/chart_eikon.jpg

 

The euro fell 0.42%.

 

(Additional reporting by Abhinav Ramnarayan, Alun John, Hideyuki Sano; Editing by Mark Potter and Leslie Adler)