How did stocks perform?

The Dow Jones Industrial Average
DJIA,
-0.03%
fell 9.42 points to end nearly unchanged at 35,804.38.

S&P 500 index
SPX,
+0.23%
rose 10.76 points, or 0.2%, to close at 4,701.46, about 0.1% below its record close of 4,704.54 on Nov. 18, according to Dow Jones Market Data.

Nasdaq Composite Index
COMP,
+0.44%
advanced 70.09 points, or 0.4%, finishing at 15,845.23.

On Tuesday, the Dow rose 195 points, or 0.55%, to 35814, the S&P 500 increased 8 points, or 0.17%, to 4691, while the Nasdaq Composite dropped 80 points, or 0.5%, to 15775.

What drove the market?

Stock indexes ended mostly higher Wednesday, as investors poured over minutes of the Fed’s November meeting released late in the session and sifted through a mixed barrage of U.S. economic data.

The Fed minutes showed several central bank officials favored a more robust pace of cuts to its monthly bond buying program and staffers revised up their near-term outlook for inflation.

“It’s in an ever more broader basket of goods and services that are running way too hot to have full monetary policy accommodation,” said David Petrosinelli, senior trader at broker-dealer InspereX, about inflation, in a phone interview.

To that end, Petrosinelli anticipates the Fed may need to move faster on reducing its $120 billion in monthly bond purchases, than the $15 billion cut slotted in for November and December.

BlackRock’s Bob Miller, head of Americas fundamental fixed income, had stronger words for the central bank. “[W]e view the ’emergency policy’ settings put in place in the wake of the second quarter 2020 response to the Covid crisis to be wildly incongruent with the economic reality on the ground today,” in emailed comments following the minutes.

However, Miller also said the nomination of Fed Chair Jerome Powell for a second, four-year term, could trigger “a more hawkish pivot to policy” if inflation pressures remain strong and labor markets continue to recover.

Earlier investors digested U.S. economic data showing first-time claims for unemployment benefits plunged by 71,000 to 199,000 last week, the lowest levels since 1969.

“Jobless claims blew it out of the water this week—a welcomed signal that the recovery is still strong despite some recent jitters around rising Treasury yields and COVID spikes,” said Mike Loewengart, managing director investment strategy at E-Trade Financial.

In other data Wednesday, the pace of economic growth in the third quarter was raised to a 2.1% annualized rate versus an initial estimate of 2%. The U.S. trade deficit in goods narrowed sharply in October.

On the other hand, orders for U.S. durable goods—products meant to last at least three years—fell 0.5% in October, the government said Wednesday. Yet the decline stemmed entirely from fewer orders for passenger planes, a volatile category that often distorts the level of underlying demand in the economy.

Data also highlighted historically elevated levels of inflation, with a measure of the cost of goods and services jumping 0.6% in October, based on the personal consumption expenditure index or PCE, and rose 5% over the past year from 4.4% in September. That’s the highest level since December 1990. The PCE index is the Federal Reserve’s favored inflation indicators.

Separately, U.S. new home sales rose 0.4% to a seasonally adjusted annual rate of 745,000 in October from 742,000 in the prior month, the Commerce Department said Wednesday. 

“The pace of sales, which is the highest since April, is largely in line with our forecast, though the downward revisions to previous months suggest that supply and labor constraints may be restricting sales more than previously thought,” Mark Palim, deputy chief economist at Fannie Mae, wrote in emailed comments.

The University of Michigan’s gauge of consumer sentiment rebounded to a final November reading of 67.4 from an initial reading of 66.8, but below the October reading of 71.7.

On the public health front, Michigan and Minnesota are leading the nation by new COVID-19 cases on a per capita basis and federal medical workers are traveling to Minnesota to support hospital staffing. Cases are up 25% in the last two weeks nationally, and up more than 40% in those states and 12 others. Overall, despite the arrival of vaccines in spring that can stop hospitalization and death, more Americans have died of COVID in 2021 than in 2020, the Times reported, as many unvaccinated people succumbed to the illness.

But one of the bigger picture stories of the last few days has been the rise in real, or inflation-adjusted, yields. The 10-year yield on Treasury-inflated-protected securities closed above -1% for the first time in three weeks on Wednesday.

“I suspect they’ll stay negative for the rest of my career so while higher real yields are likely, I suspect that this is a trade rather than a structural long-term journey given likely long-term financial repression,” said Jim Reid, head of thematic research at Deutsche Bank.

See: Falling real yields are a key to the stock-market rally: What investors need to know

Which companies were in focus?

Gap Inc.
GPS,
-24.12%
on Tuesday blamed “significant” supply-chain constraints as it cut its full-year earnings guidance and reported third-quarter results that fell short of expectations. Its shares ended 24.1% lower Wednesday.

Shares of Nordstrom Inc.
JWN,
-29.03%
 slumped 29% Wednesday after the department store chain reported third-quarter earnings short of analysts’ expectations.

E-commerce platform Global-e Online Ltd. GLBE, +0.40% announced it will acquire technology Flow Commerce Inc. in a deal valued up to $500 million.

Johnson & Johnson JNJ said Wednesday its one-dose COVID-19 vaccine has been granted full approval by Health Canada, marking its first major regulatory approval. Shares fell 0.3%.

Shares of Deere & Co. DE jumped 5.3% Wednesday, after the agricultural and construction equipment company reported fiscal fourth-quarter profit and sales that rose above expectations, as strong demand for farm and construction equipment helped offset cost of sales growth that outpaced sales growth amid supply-chain challenges.

GameStop Corp. GME stock slipped 1% Wednesday. It said it will report fiscal third-quarter earnings results on Dec. 8, after the closing bell. 

Cathie Wood’s ARK funds sold Tesla TSLA to increase their stake in Zoom Video Communications ZM, after the poorly received results by the video communications company. Tesla shares gained 0.6%.

How did other assets fare?

The 10-year Treasury note
TMUBMUSD10Y,
1.641%
yield fell to 1.644%, versus 1.665% on Tuesday at 3 p.m. ET.

The ICE U.S. Dollar Index DXY, +0.40%, a measure of the currency against a basket of six major rivals, was up 0.3%.

Gold futures for December delivery GCZ21 rose less than 0.1% to settle at $1,784.30 an ounce. U.S. oil futures
CLF22,
-0.23%
finished down 0.1%, settling at $78.39 a barrel.

The Stoxx Europe 600 SXXP closed 0.1% higher, while London’s FTSE 100 index UKX rose 0.3%.

In Asia, the Shanghai Composite SHCOMP finished up 0.1% higher, while the Hang Seng Index HSI picked up 0.1% in Hong Kong. China’s CSI 300 000300 was little changed and Japan’s Nikkei 225 NIK declined 1.5% after being closed on Tuesday.

—Steve Goldstein contributed reporting