U.S. stocks rose Wednesday, after dovish comments from a top Federal Reserve official raised expectations that the U.S. central bank has ended its rate-hiking cycle.
Waller hints at future rate cuts
Sentiment received a boost following comments from Federal Reserve Governor Christopher Waller, who suggested on Tuesday that the U.S. central bank’s monetary policy is “well-positioned” to cool inflation.
Waller, normally known as a hawkish voice at the Fed, added that should inflation continue to ease back down to the Fed’s 2% target for “several more months,” there is a chance that officials “could start lowering” interest rates.
Headline inflation in the U.S. slowed by more than anticipated to 3.2% in October, and Thursday sees the release of the Fed’s preferred inflation gauge, the personal consumption expenditures price index.
This is expected to have risen just 0.1% on the month in November, a drop from 0.4% in September, while the core reading, which strips out food and fuel costs and is considered a better gauge of underlying inflation, is expected to have risen 3.5% on a year-over-year basis, a drop from 3.7% the prior month, and the lowest since mid-2021.
Sentiment was also boosted by the news that the U.S. economy grew faster than initially thought in the third quarter, as gross domestic product increased at a 5.2% annualized rate last quarter, revised up from the previously reported 4.9% pace.
Berkshire Hathaway in spotlight after Munger’s death
On the corporate front, General Motors (NYSE:GM) stock soared 10% after the auto giant said it will buy back $10 billion in shares and boost its dividend by 33%.
Dollar Tree (NASDAQ:DLTR) stock rose 5% after the retailer trimmed its full-year sales forecast but also said it was reviewing its Family Dollar business.
CrowdStrike Holdings (NASDAQ:CRWD) stock just under 5% as the cybersecurity firm forecast fourth-quarter revenue above expectations, driven by resilient demand for its cybersecurity offerings.
Additionally, Berkshire Hathaway (NYSE:BRKb) is in the spotlight after the announcement of the death of Charlie Munger, vice chairman of the vast conglomerate, just short of his 100th birthday.
Munger was known as the right-hand man of Berkshire’s head Warren Buffett, helping to turn Berkshire from a rundown textile manufacturer into an investment empire worth almost $800 billion.
Oil gains in supply disruptions
Oil prices surged Wednesday, boosted by more supply disruptions ahead of a crucial OPEC+ meeting to discuss future production levels.
A severe storm in the Black Sea region has disrupted up to 2 million barrels per day of oil exports from Kazakhstan and Russia, fuelling concerns of short-term supply tightness.
These worries, however, could be alleviated if the Organization of Petroleum Exporting Countries and allies, a group known as OPEC+, decides to announce deeper production cuts at its meeting on Thursday.
Oil also found support from a drop in U.S. crude inventories, with industry body American Petroleum Institute estimating a fall of 817,000 barrels last week. Official data is scheduled for release later in the session.
(Oliver Gray contributed to this item.)