By Yasin Ebrahim
Investing.com -- The Dow closed higher Wednesday, after swinging between gains and losses as investors digested the Federal Reserve December meeting minutes signaling higher for longer rates and data showing a tight labor market that stoked fears of a wage-driven pick-up in inflation.
The Dow Jones Industrial Average climbed 0.4%, or 133 points, the Nasdaq Composite was 0.69% higher, while the S&P 500 closed 0.74% higher.
Fed members favored a "restrictive policy stance for a sustained period," until inflation was on a sustained downward path to 2 percent, which was likely to take "some time," the Fed's December meeting minutes showed Wednesday,
The minutes stoked fears of higher for longer rates just as data highlighted a slower-than-expected dent in labor demand.
The U.S. Labor Department's latest Job Openings and Labor Turnover Survey (JOLTs) report, a measure of labor demand, showed job openings in November fell less than expected to about 10.5 million, compared with expectations of 10.0 million.
The JOLTS report was “very strong,” Jefferies said in a note, warning that without a “substantial reduction in labor demand…the Fed will not be comfortable pausing, let alone cutting rates.”
U.S. Treasury yields, however, continued to trade in the red and were reluctant to price in more aggressive Federal Reserve rate hikes.
Banking stocks, however, shrugged off the fall in Treasury yields, the enemy of net interest margins, as investors looked ahead to the start of quarterly earnings season in earnest next week.
“4Q earnings should be decent for most banks, in our view, with higher rates and solid loan growth continuing to benefit net interest income in the near term, but positive momentum may start to fade,” Wedbush said in a note.
Citigroup Inc (NYSE:C), SVB Financial Group (NASDAQ:SIVB), Zions Bancorporation (NASDAQ:ZION) led the gainers in financials.
In consumer discretionary, Tesla Inc (NASDAQ:TSLA) climbed 5% following a 12% plunge a day earlier, while Bath & Body Works Inc. (NYSE:BBWI) jumped 10% following a price upgrade to $52 from $50 from Piper Sandler.
Travel and leisure stocks were also in focus as cruise stocks rallied after Carnival said it would raise its price for U.S. and European guests starting April 1.
Carnival Corporation (NYSE:CCL) was up 9%, while Royal Caribbean Cruises Ltd (NYSE:RCL) and Norwegian Cruise Line Holdings Ltd (NYSE:NCLH) were up more than 8% and 5% respectively.
Microsoft Corporation (NASDAQ:MSFT), meanwhile, fell almost 5% after UBS downgraded the stock to neutral from buy, citing demand headwinds for the company’s office and cloud businesses.
A Micron-led surge in semiconductor stocks helped keep a lid on downside momentum in tech.
Micron Technology (NASDAQ:MU) rallied more than 7% after Daiwa talked up the prospect of higher memory prices on expectations for a rebound in demand in the second half of the year.