Investors Got What They Wanted: Fed Finally Promised to Curb the Pace of Rate Hikes

The stock market closed out November on a decidedly upbeat note. The main indices all logged big gains yesterday and in today’s premarket, and the S&P 500 was able to break above a key support level, its 200-day moving average at 4,050. All 11 S&P 500 sectors finished the day higher, led by technology stocks that have come under pressure this year on fears of slowing growth. On Wednesday, the Dow jumped 737.24 points, or 2.18%, to 34,589.77, while the tech-heavy Nasdaq surged 4.41%. Market participants unanimously hailed the speech from Fed Chair Powell at 1:30 p.m. EST yesterday. Federal Reserve Chair Jerome Powell appeared to confirm a slowdown in the central bank's tightening — a question that's lingered in recent weeks.

All the major averages finished November higher. The Nasdaq rose 4.37% — its second positive month in a row, for the first time since a 3-month losing streak ending December 2021. For the month, both the S&P and Dow rose 5.38% and 5.67%, respectively, to finish their second month of gains for the first time since August 2021.

Investors' focus today turns to the U.S. initial jobless claims ahead of the much anticipated November jobs report due out Friday. The payrolls report is expected to provide more clarity on the labor market, and whether it continues to cool. Economists surveyed by Dow Jones estimate the economy added 200,000 jobs in November, down from 261,000 additions in October. They also anticipate that the unemployment rate held steady from the prior month at 3.7%. Personal income and personal consumption expenditures data are also expected, along with earnings from Kroger (KR), Dollar General (DG), and Ulta Beauty (ULTA).

European shares scaled over three-month highs this afternoon, inspired by U.S. Federal Reserve Chair Jerome Powell signalling smaller interest rate hikes ahead, and China’s softening its stance towards Covid-19 restrictions. Investors are looking beyond data that showed German retail sales fell more-than-expected in October as inflation had consumers holding back on non-essential purchases at the start of the fourth quarter.

The pan-European Stoxx 600 index rose 0.61% by 11:45 p.m. CET, after posting a 6.8% increase in November, its best month since July. Technology and industrial stocks are among the biggest winners this time around. On the other hand, energy stocks are underperforming while capping gains for the broader index as oil prices dipped amid uncertainty ahead of Sunday's OPEC+ meeting. At the time of writing, the German DAX traded 0.33% higher, while both the British FTSE 100 and the French CAC 40 are trading relatively flat. Shares of HSBC slipped 1.9% as it announced a possible sale of its New Zealand business and plans to close 114 branches in UK, in the latest retrenchment by the bank as it strives to improve returns amid criticism from a top investor.

Asian shares climbed earlier this morning, tracking overnight Wall Street gains. Japan's Nikkei 225 climbed 0.92% to 28,226. Hong Kong’s Hang Seng surged 0.75% to 18,736. South Korea's Kospi also added 0.75% to 2,491. The Shanghai Composite rose 0.45% to 3,165.