U.S. stocks ended Wednesday’s session higher after the Federal Reserve’s latest meeting minutes showed most officials backing slowing the pace of interest-rate hikes soon. 

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The S&P 500 and the Nasdaq 100 notched gains for a second straight session. Treasuries rallied, with the benchmark 10-year yield around 3.69 per cent. Wall Street’s fear gauge, the Cboe Volatility Index, fell to its lowest level in more than three months. U.S. stock and bond markets will be closed on Thursday for the Thanksgiving holiday. 

Several Fed officials backed the need to moderate the pace of rate hikes, the central bank’s Nov. 1-2 meeting minutes show. Only a small number of these officials underscored the need for a higher terminal rate. Since the Fed’s latest meeting, investors have parsed a bevy of economic data that somewhat eased inflation concerns, further strengthening the case for smaller rate hikes.

“The minutes were dovish as they recognized a softening in consumer demand and tightening international economic and financial conditions,” said Jay Hatfield of Infrastructure Capital Management.

Still, some investors think that the meeting minutes didn’t convey anything new and that markets may be overreacting to the perceived shift in tone.

“The minutes said that hikes can be smaller than 75bps but also that the terminal rate will need to be higher than previously thought -- which also is pretty much what everyone at the Fed has been signaling anyway,” said Max Gokhman, chief investment officer at asset manager AlphaTrAI. “It’s almost weird we’re getting any kind of big moves on the minutes. I guess the market is happy to take a longer road to a more painful outcome given the reaction to the minutes.”

Meanwhile, the dollar dropped for a second day as investors assessed a fresh batch of economic data. Business activity in the U.S. continued to contract and separate data showed U.S. unemployment applications rising more than expected, in a sign of cooling in the labor market.

Key events this week:

• ECB publishes account of its October policy meeting, Thursday
• U.S. stock and bond markets are closed for the Thanksgiving holiday, Thursday
• U.S. stock and bond markets close early, Friday

Some of the main moves in markets:

Stocks

• The S&P 500 rose 0.6 per cent as of 4 p.m. New York time
• The Nasdaq 100 rose 1 per cent
• The Dow Jones Industrial Average rose 0.3 per cent
• The MSCI World index rose 1.1 per cent

Currencies

• The Bloomberg Dollar Spot Index fell 0.8 per cent
• The euro rose 1 per cent to US$1.0402
• The British pound rose 1.5 per cent to US$1.2065
• The Japanese yen rose 1.2 per cent to 139.50 per dollar

Cryptocurrencies

• Bitcoin rose 2.9 per cent to US$16,594.92
• Ether rose 3.9 per cent to US$1,173.48

Bonds

• The yield on 10-year Treasuries declined six basis points to 3.69 per cent
• Germany’s 10-year yield declined five basis points to 1.93 per cent
• Britain’s 10-year yield declined 13 basis points to 3.01 per cent

Commodities

• West Texas Intermediate crude fell 4.3 per cent to US$77.44 a barrel
• Gold futures rose 0.7 per cent to US$1,766.50 an ounce