U.S. stocks closed higher Wednesday, with the Dow Jones Industrial Average edging into positive territory just ahead of the closing bell, as the minutes from the Federal Reserve’s March meeting reassured investors that the central bank is in no hurry to resume raising interest rates.
How did the benchmarks fare?
The S&P 500 index SPX, +0.35% gained 10.01 points, or 0.4%, to end at 2,888.21 while the Nasdaq Composite COMP, +0.69% rose 54.97 points, or 0.7%, to close at 7,964.24. The Dow Jones Industrial Average DJIA, +0.03% edged up 6.58 points to 26,157.16 after spending most of the day in negative territory.
What drove the market?
The minutes showed that policy makers last month dropped plans for further rate increases in 2019 due to unease over the U.S. and global economies and unexpectedly tame inflation.
“A majority of participants expected that the evolution of the economic outlook and risks to the outlook would likely warrant leaving the target range unchanged for the remainder of the year,” the minutes said.
Meanwhile, the central bank remained sanguine about inflation.
Data released Wednesday morning showed consumer prices rose at the fastest pace in 14 months in March, though gains were muted when excluding volatile food and energy prices.
Investors were also monitoring a summit meeting of European Union leaders, where the main topic will be Britain’s attempt to stage an orderly exit from Europe’s trade bloc. The EU is set to discuss a potential long extension of the U.K.’s Brexit plans.
The European Central Bank earlier made no changes to monetary policy, as expected, repeating that it intends to leave rates at current levels until at least the end of 2019. ECB President Mario Draghi, in his news conference, said risks to the eurozone economic outlook remained skewed to the downside and that policy makers were willing to use all tools at their disposal if warranted by a deteriorating outlook.
On Tuesday, the S&P 500 snapped an eight-session win streak on fears over escalation of trade tensions with the European Union and a weaker global outlook from the International Monetary Fund.
The Trump administration threatened to impose tariffs on $11 billion worth of imports from the European Union, raising the specter of increased global trade tensions beyond the continuing U.S.-China spat.
What were strategists saying?
“I think there’s a bit more inflation beneath the surface than the market has been acknowledging,” Willie Delwiche, investment strategist with R.W. Baird, told MarketWatch. “The Fed is trying to be transparent and say ‘we’re going to be on hold right now and we are going to give what we’ve done over the past two years time to settle and see what happens. The market seems to think that if you are tilting toward a ‘wait and see policy’ you are actually preparing for rate cuts this year.”
“In the past, the Fed has used minutes to clarify confusion over what it said” following the most recent meeting, Delwiche added, arguing that the Fed minutes could provide more clarity as to how the Fed is interpreting the latest data.
“The stronger 0.4% month on month rise in headline consumer prices, which drove the annual inflation rate back up to 1.9%, from 1.5%, was mainly due to the continued rebound in gasoline prices,” wrote Andrew Hunter, senior U.S. economist at Capital Economics, in a note.
“The further decline in core CPI inflation to a 13-month low of 2% in March, from 2.1%, underlines that there is little chance of inflation breaking out above the Fed’s target any time soon,” he said. “We continue to expect that weaker activity growth will convince officials to start cutting interest rates before the end of the year.”
What stocks were in focus?
Ride-sharing company Lyft Inc. LYFT, -10.85% shares sank 11% as investors focused on Uber Inc.’s plans for its own initial public offering. The stock has fallen more than 19% since Lyft’s March 28 IPO.
Uber is set to kick off its IPO market campaign, selling $10 billion in stock, according to a number of reports. That public debut is slated to take place as early as May on the New York Stock Exchange, according to reports.
Shares of Boeing Co. BA, -1.11% fell 1.1% after Intelsat SA I, +3.93% said it lost communication with its Intelsat 29e satellite, made by Boeing.
Apple Inc. AAPL, +0.56% shares rose 0.6% after HSBC downgraded shares to reduce from hold.
Shares of Levi Strauss & Co. LEVI, +3.98% gained 4% after the apparel designer reported late Tuesday its first quarterly results since its March initial public offering.
JetBlue Airways Corp. JBLU, +3.55% shares advanced 3.6% after the airliner reported a nearly 8% increase in traffic for March, though it said it expects revenue-per-available-seat mile to fall 3.1% in the first quarter.
Shares of Delta Air Lines Inc. DAL, +1.60% rose 1.6% after the air carrier reported first-quarter profit and revenue that surpassed Wall Street expectations while issuing an upbeat outlook.
How were other markets trading?
Stocks in Asia closed mostly lower, with Japan’s Nikkei 225 NIK, -0.28% retreating 0.5% and Hong Kong’s Hang Seng Index HSI, -0.99% losing 0.1%, while China’s Shanghai Composite Index SHCOMP, -1.09% added 0.1%.
European stocks closed on a mixed note as the Stoxx Europe 600 SXXP, +0.26% rose 0.3%.
In commodities markets, the price of oil CLK9, -0.51% extended gains and gold futures GCM9, -0.29% settled higher. The U.S. dollar DXY, +0.03% meanwhile, traded mostly unchanged against its peers.
