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US stocks pared gains on Wednesday after minutes from the Federal Reserve’s latest meeting showed officials wanted to see more evidence of cooling inflation and supported continuing raising interest rates in 2023.

Wall Street’s benchmark S&P 500 index gained 0.8 per cent and the technology heavy Nasdaq Composite added 0.7 per cent in a volatile trading session. Stock markets had been more than 1 per cent higher before the minutes were released.

Previous remarks by Fed chair Jay Powell that the US central bank would slow its pace of rate rises “was not an indication of any weakening of the committee’s resolve to achieve its price-stability goal or a judgment that inflation was already on a persistent downward path”, participants in the December meeting said, according to the minutes.

Investors also seized on economic data released on Wednesday that showed a contraction in US manufacturing activity in December, the second month in a row, bringing it to its lowest level since May 2020.

The report from the Institute for Supply Management also showed that a decline in prices paid by manufacturers accelerated last month.

“Nearly all the survey-based evidence now points to, at best, a complete stagnation in activity or, more likely, a shallow recession beginning soon,” said Paul Ashworth, chief North America economist at Capital Economics.

US job openings in November fell marginally on the previous month but exceeded forecasts, with nearly 10.5mn positions available, far more than the 10mn predicted by economists.

Read more about the market moves.