Stock Market Today: Fed Minutes Make for a Choppy Session

Markets closed higher after downbeat economic data and a hawkish central bank roiled stocks.

green stock market chart
(Image credit: Getty Images)

Some mixed economic data and the release of the minutes from the last meeting of the Federal Reserve's rate-setting committee made for a volatile session on Wednesday. 

The major indexes overcame some early stumbles to trade higher for most of the day – but then reversed course after it became clear that the central bank has no interest in cutting interest rates anytime soon. 

Market participants had plenty of economic data to digest even before the Fed minutes landed at 2 p.m. Eastern Time. Among the most important news was a report that U.S. manufacturing activity contracted for a second month in December. The Institute for Supply Management's gauge of factory activity fell to 48.4 last month – the lowest reading since the COVID-19 month of May 2020 – from 49 in November. 

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Readings below 50 indicate contraction. With ISM's December figure now in the books, 2022 represented the steepest annual drop in manufacturing activity since the Great Financial Crisis year of 2008. 

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The factory data confirm "fading global goods demand and falling production," wrote Jonathan Millar, senior U.S. economist at Barclays Investment Bank. "December's composite reflects intensifying contractions in new orders and supplier delivery times, as well as the production index dropping into contractionary territory."

Markets shrugged off the data to trade higher. But the release of the Fed meeting minutes (in which officials affirmed their hawkish stance on inflation) led to a pullback.

"The tone [of the minutes] was hawkish, but not more so than anticipated," wrote Ian Lyngen, head of U.S. Rates Strategy at BMO Capital Markets, in a note to clients. "It was encouraging to see the Fed acknowledge the risks of the market easing financial conditions while the FOMC is actively attempting to tighten further."

Happily, markets managed to rebound by the closing bell. The blue-chip Dow Jones Industrial Average added 0.4% to finish at 33,269, while the broader S&P 500 gained 0.8% to close at 3,852. The tech-heavy Nasdaq Composite rose 0.7% to finish at 10,458. 

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Dan Burrows
Senior Investing Writer,

Dan Burrows is Kiplinger's senior investing writer, having joined the august publication full time in 2016.

A long-time financial journalist, Dan is a veteran of SmartMoney, MarketWatch, CBS MoneyWatch, InvestorPlace and DailyFinance. He has written for The Wall Street Journal, Bloomberg, Consumer Reports, Senior Executive and Boston magazine, and his stories have appeared in the New York Daily News, the San Jose Mercury News and Investor's Business Daily, among other publications. As a senior writer at AOL's DailyFinance, Dan reported market news from the floor of the New York Stock Exchange and hosted a weekly video segment on equities.

Once upon a time – before his days as a financial reporter and assistant financial editor at legendary fashion trade paper Women's Wear Daily – Dan worked for Spy magazine, scribbled away at Time Inc. and contributed to Maxim magazine back when lad mags were a thing. He's also written for Esquire magazine's Dubious Achievements Awards.

In his current role at Kiplinger, Dan writes about equities, fixed income, currencies, commodities, funds, macroeconomics, demographics, real estate, cost of living indexes and more.

Dan holds a bachelor's degree from Oberlin College and a master's degree from Columbia University.

Disclosure: Dan does not trade stocks or other securities. Rather, he dollar-cost averages into cheap funds and index funds and holds them forever in tax-advantaged accounts.