Wall Street Today | FOMC Reports No Rate Change, High Yeilds May Help Stem Inflation

Stocks were higher Wednesday after the FOMC reported no targeted changes in the interest rates, reacting to high yields and unchanged economic indicators. ISM reported manufacturing PMI.

"The surprise slump in the ISM manufacturing index to 46.7 in October, from 49.0, suggests the recent recovery in factory-sector activity is fading and supports our view that the upturn in economic growth in the third quarter is set to be reversed," Andrew Hunter, an economist at Capital Economics told Bloomberg. Any number below 50% reflects a shrinking activity, meaning manufacturing has contracted for 12 months.

The Federal Open Market Committee has made no decisions on future rate actions; instead will be proceeding cautiously with a focus on bringing down inflation toward the 2% goal, Federal Reserve Chairman Jerome Powell said Wednesday in a press conference after the FOMC meeting. Powell said tighter financial conditions from higher long-term rates, a stronger dollar, and lower stocks could matter for future rate conditions.

"We have not decided and we are not confident at this time we have reached such a stance," Powell said. "We are not confident that we have not or we have. That is the way we will be going into these future meetings, is to be, you know, determining the extent of additional further policy tightening that may be appropriate to return inflation to 2% over time."

Yields on shorter-term Treasurys, which are particularly sensitive to the near-term outlook for rates, fell markedly as Fed Chair Jerome Powell answered questions from reporters--leading a broad decline in yields.

Fed funds futures recently showed that investors see a roughly 20% chance that the Fed will raise rates in December, down from 29% on Tuesday, according to CME Group data.

Oil extended a three-day losing streak amid signs of a more amply supplied market and as investors assess the risks posed by the war between Israel and Hamas.

West Texas Intermediate settled below $81, at the lowest in two months, after a volatile session that saw prices swing in a $3 range. American citizens and foreign nationals will be able to exit Gaza, which is the first such development since Israel began its ground invasion. The announcement helped erase the war’s risk premium.

The EIA posted half the forecasted inventories, showing crude is turning over fast. However, Bloomberg reported that U.S. crude futures were painting a bearish picture. The US benchmark also crossed beneath its 100-day moving average for the first time since July, a bearish technical sign that may trigger more selling.

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