Markets navigated a turbulent session on Wednesday, with Wall Street closing mixed as investors weighed the Federal Reserve’s latest minutes and the implications of rising bond yields. Bond yields, which have been climbing on bets that President-elect Donald Trump’s tariff and tax plans could lead to a spike in inflation, wavered throughout the trading session. The Federal Reserve’s minutes highlighted concerns over upside inflation risks, adding to investor uncertainty. The S&P 500 managed a modest gain, while the Dow outperformed, supported by defensive sectors. However, the Nasdaq slipped, dragged down by losses in tech stocks. Overseas, European markets struggled with declining economic sentiment, while Asia-Pacific markets delivered mixed performances amid concerns over Treasury yields and a strengthening US dollar. Meanwhile, US Markets will be closed on Thursday for a National Day of Mourning to mark the death of former President Jimmy Carter.

Key Takeaways:

  • S&P 500 Posts Modest Gain Amid Inflation Concerns: The S&P 500 edged up 0.16%, closing at 5,918.25, marking a cautious recovery as traders assessed the Federal Reserve’s signals of potential inflation risks. Despite the gain, the index remains on track for its second consecutive weekly loss, reflecting persistent concerns over monetary policy and economic growth.
  • Dow Outperforms with Defensive Strength: The Dow Jones Industrial Average rose 106.84 points, or 0.25%, to finish at 42,635.20. Defensive sectors provided support, helping the index outperform its counterparts. 
  • Nasdaq Slips as Tech Stocks Weigh on Performance: The Nasdaq Composite dipped 0.06% to 19,478.88, dragged down by losses in major technology stocks. The tech-heavy index is also on pace for its second weekly decline amid rising bond yields and cautious market sentiment.
  • Private Sector Job Creation Slows in December: US private sector job growth eased more than expected in December, with 122,000 jobs added, down from 146,000 in November and below forecasts of 136,000. This marks the smallest monthly increase since August. Wage growth also slowed, with pay rising at a 4.6% annual rate, the slowest since July 2021. 
  • European Markets Close Lower on Weak Sentiment Data: The pan-European Stoxx 600 index fell 0.27%, weighed down by declining economic sentiment across the eurozone. The CAC 40 dropped 0.57%, while Germany’s DAX closed nearly flat, down 0.05%. Italy’s FTSE MIB bucked the trend, gaining 0.49% to reclaim the 35,000-point mark, its highest level since late October 2024. British energy giant Shell led the declines in the FTSE 100, which inched up just 0.07%, after the company revised down its LNG production outlook and warned of weaker trading results.
  • Asian Markets Deliver Mixed Results Amid Treasury Yield Concerns: Asia-Pacific markets saw divergent performances as rising US Treasury yields pressured sentiment. Japan’s Nikkei 225 slipped 0.26% to close at 39,981.06, while the Topix lost 0.59% to 2,770. Mainland China’s CSI 300 closed 0.18% lower at 3,789.22, and Hong Kong’s Hang Seng fell 0.83%. In contrast, South Korea’s Kospi rose 1.16%, buoyed by a 3.43% jump in Samsung Electronics shares, while Australia’s S&P/ASX 200 gained 0.77% to close at 8,349.1.
  • Oil Prices Decline on Surging US Fuel Inventories: Crude oil prices fell more than 1% on Wednesday, pressured by a stronger US dollar and unexpected builds in US fuel inventories. Brent crude dropped 1.13% to settle at $76.18 per barrel, while West Texas Intermediate slid 1.23% to $73.34. US gasoline stocks surged by 6.3 million barrels last week, well above expectations for a 1.5-million-barrel build, while distillate inventories rose by 6.1 million barrels.
  • US Treasury Yields Hit Multi-Month Highs: The benchmark 10-year Treasury yield climbed to its highest level since late April, briefly topping 4.7% before settling at 4.677%. The 30-year Treasury yield hovered near 4.918%, reflecting heightened concerns over inflation risks outlined in the Federal Reserve’s December meeting minutes. The 2-year yield eased slightly to 4.274%, but markets remained jittery over the potential for fewer rate cuts in the near term.

FX Today:

  • EUR/USD Struggles Below Key Levels Amid Inflation Concerns: EUR/USD declined 0.23% to close at 1.0315, as persistent bearish momentum continued to weigh on the pair. Trading below its 50-day SMA at 1.0534 and 100-day SMA at 1.0784, the pair remains under pressure, with sellers dominating the market. Immediate support is now seen at 1.0300, with further downside targets at 1.0200 and the psychological 1.0100 level. On the upside, resistance lies at 1.0350, followed by the 50-day SMA near 1.0534. Momentum indicators such as RSI and MACD remain bearish, signalling limited upside potential unless the pair can reclaim key levels.
  • GBP/USD Extends Losses as Bearish Momentum Intensifies: GBP/USD dropped 0.90% to close at 1.2364, deepening its recent decline. The pair is firmly entrenched in a downtrend, trading below its 50-day SMA at 1.2681 and 100-day SMA at 1.2918. Immediate support is located at the critical 1.2300 level, with a break below likely accelerating losses toward 1.2200 and potentially 1.2100. On the upside, resistance is seen at 1.2450 and 1.2500. Momentum indicators such as RSI and MACD remain bearish, suggesting further downside in the short term unless a recovery above key levels occurs.
  • USD/JPY Rises Toward Resistance as Treasury Yields Bolster Dollar: USD/JPY climbed 0.19% to close at 158.344, continuing its upward trajectory as the pair edges closer to the key 158.500 resistance level. The pair remains firmly above its 50-day SMA at 154.082 and 100-day SMA at 150.044, providing robust support for the ongoing uptrend. A breakout above 158.500 could open the door to further gains toward the psychological 160.000 level. On the downside, immediate support lies at 157.000, with additional protection at 155.000. Positive momentum indicators suggest continued bullish potential, though failure to breach 158.500 could lead to temporary consolidation.
  • EUR/GBP Gains Momentum Amid Renewed Buying Interest: EUR/GBP rose 0.68%, closing at 0.8343, as bullish momentum pushed the pair higher. Following a period of consolidation near 0.8300, buyers re-emerged, driving the pair above its 50-day SMA at 0.8309. The pair now trades near its 100-day SMA at 0.8349, which could act as a short-term resistance level. A breakout above this level would target the psychological 0.8400 mark, followed by the 200-day SMA at 0.8428. On the downside, immediate support lies at 0.8300, with further protection at 0.8250, aligning with last month’s lows. Momentum indicators, including RSI and MACD, are turning positive, signalling the potential for further gains, though sustained upward movement depends on clearing key resistance levels.
  • Gold Gains as Fed Minutes Highlight Inflation Risks: Gold prices rose 0.57%, closing at $2,663.19 as traders responded to the Federal Reserve’s cautious tone on inflation and its potential impact on monetary policy. The metal broke above its 50-day SMA at $2,648, a bullish signal for further gains. Immediate resistance is seen at $2,670, with a breakout targeting $2,700 and $2,720. On the downside, $2,648 now acts as a critical support level, with the 100-day SMA at $2,628 offering additional downside protection. Momentum indicators, including RSI and MACD, suggest the broader uptrend remains intact, supported by geopolitical and economic uncertainties driving demand for the safe-haven asset.

Market Movers:

  • eBay Surges on Meta Partnership News: eBay shares soared nearly 10%, reaching a 52-week high after announcing that Meta is testing the integration of its listings on Facebook Marketplace.
  • Edison International Drops Over 10% Amid California Wildfires: Edison International saw its stock plummet 10.2%, marking its worst trading day since March 2020. The decline follows reports of devastating wildfires in the Los Angeles area.
  • Getty Images Tanks After Previous Surge: Shares of Getty Images plunged 17.6%, reversing the 24% gain from the prior session. The sharp drop comes in the wake of its announced $3.7 billion merger with Shutterstock. 
  • SolarEdge Technologies Declines After Citi Downgrade: SolarEdge shares fell 14.8% following a downgrade to “sell” by Citi. The bank highlighted “stubbornly high” operating expenses despite the company’s recent restructuring efforts. 
  • Accolade Skyrockets on Acquisition News: Accolade shares surged by nearly 105% following the announcement of its acquisition by Transcarent for $7.03 per share in cash, valuing the company at approximately $621 million. 
  • Palantir Extends Losses Amid Continued Selling Pressure: Palantir Technologies continued its slide, falling another 2.5% as investor sentiment soured following Morgan Stanley’s underweight rating and Cathie Wood’s sale of $15 million worth of shares across her Ark funds. 

As global markets grapple with mixed economic signals, Wall Street ended the day with subdued movements, reflecting investor caution ahead of Friday’s critical December payroll report. The S&P 500 edged higher while the Dow outperformed, supported by defensive plays, but the Nasdaq lagged, weighed down by tech losses. Across the Atlantic, European markets closed mostly lower, pressured by weaker economic sentiment and declines in industrial activity, while Asian indices delivered a mixed performance amid rising Treasury yields and a stronger US dollar. With the Federal Reserve signalling inflation risks and fewer-than-expected rate cuts, investors remain on edge, awaiting further clarity from upcoming economic data to chart the market’s next direction.