By Market Snapshot: Dow books 4th day of gains, stocks rally after Fed minutes signal flexibility on interest rate hikes
The Dow was clinging to a modest gain in choppy afternoon trade Wednesday as investors combed through minutes of the early May Federal Reserve meeting that were released to help gauge the course of its interest-rate policy.
How are stocks trading?
The Dow Jones Industrial Average
DJIA,
+0.44%
rose 61 points, or 0.2%, to 31,987
The S&P 500
SPX,
+0.89%
gained 24 points, or 0.6% to 3,964, after flipping between small gains and losses.
The Nasdaq Composite
COMP,
+1.50%
advanced 126 points, or 1.1% to 11,391
On Tuesday, the Dow industrials
DJIA,
+0.44%
rose 0.2% to 31,928.62, its third straight gain. The S&P 500
SPX,
+0.89%
fell 0.8% to 3,941.48, snapping two straight days of gains, while the Nasdaq Composite
COMP,
+1.50%
slumped 2.4% to 11,264.45, its lowest close since Nov. 3, 2020.
What’s driving the markets?
Investors were sifting through minutes of the Federal Reserve’s early May meeting minutes Wednesday afternoon for hints as to whether the central bank has plans to rethink its aggressive plans to raise rates to tame high inflation.
Minutes from the May meeting showed support for half-point moves by the Fed as it seeks to get its policy rate “expeditiously toward neutral,” over the next couple of meetings, but that high inflation remains a key focus.
Concerns have been mounting about the potential for the Fed to tighten financial conditions too sharply and damage the economy, particularly with businesses and households already facing the sharpest price pressures in decades.
The fear is economic growth will slow quickly, with the war in Ukraine and China’s COVID lockdowns worsening the outlook.
U.S. benchmark indexes have suffered this month after grim earnings outlooks from several major retailers. More reports this week could help inform how other companies are handling inflationary pressures. Snowflake
SNOW,
+2.88%
and Nvidia
NVDA,
+4.83%
are set to post quarterly reports after the bell Wednesday. Costco
COST,
+0.84%
will report on Thursday. They might also help stocks find a footing.
“I think the market has put in a bottom,” said Peter Cardillo, chief market economist at Spartan Capital Securities, by phone.
The S&P 500’s recent testing of the 3,850 level, but then finding higher ground, helped inform his rationale. Cardillo also said investors have been “through the discounting process of high inflation,” aggressive tightening of financial conditions by the Fed and the probability of a recession.
Read: S&P 500 hovers near bear market. Its ferocity may depend on the economy.
Fed Chairman Jerome Powell earlier laid plans for the central bank to boost the benchmark interest rate by half-a-percentage point at the next two FOMC meetings in June and July, bringing it to near 2% by August.
The minutes of May meeting “are a month old and the markets have a lot of time change in the meantime, and it won’t really affect anything going forward,” said Randy Frederick, managing director of trading and derivatives at Charles Schwab.
In economic data on Wednesday, orders at U.S. factories for long-lasting goods such as machinery and electronics rose a 0.4% in April, signaling the economy was still growing at a steady pace in the early spring. Economists polled by the Wall Street Journal had forecast a 0.7% increase.
Read: Here’s what KPMG’s U.S. chief is saying about the market downturn, the economy and M&A
Which companies are in focus?
Shares of Dick’s Sporting Goods Inc.
DKS,
+10.03%
soared 8.8% Wednesday, after the sporting goods and apparel retailer reported fiscal first-quarter results that beat expectations.
Express Inc. shares
EXPR,
+9.91%
jumped 8% Wednesday, after the clothing retailer posted a narrower-than-expected loss for the first quarter and offered guidance that was above consensus.
Wendy’s
WEN,
+9.93%
rallied nearly 10% after long-time shareholder Trian Fund Management said it was exploring an acquisition or other potential deal for the restaurant chain. Trian is the company’s largest shareholder, with a 19.4% stake.
Kohl’s Corp.
KSS,
+12.22%
shares gained nearly 11% on Wednesday after Reuters reported that bidders continue to circle the retailer at lower prices than earlier this year, but still well above recent trading levels of the stock.
Nordstrom
JWN,
+12.81%
surged 11.3% after the retailer raised its annual sales and profit forecast late Tuesday.
How are other assets trading?
The yield on the 10-year Treasury note
TMUBMUSD10Y,
2.759%
was steady, about 1 basis point lower at 2.75%, as investors sought safety in government debt. Yields and Treasury prices move opposite each other.
The ICE Dollar Index
DXY,
+0.31%,
which measures the greenback against major currencies, was up 0.3%.
In oil futures
CL.1,
+0.53%,
West Texas Intermediate crude for July delivery
CLN22,
+0.53%
gained 0.4% to $110 a barrel. Gold for June delivery
GCM22,
-0.78%
dropped 1% to close at $1,846.30 an ounce.
Bitcoin
BTCUSD,
+1.69%
was up 0.4% at $29,430.
In European equities, the Stoxx Europe 600
SXXP,
+0.63%
closed up 0.6%, while London’s FTSE 100
UKX,
+0.51%
edged 0.5% higher.
In Asia, the Shanghai Composite
SHCOMP,
+1.19%
finished 1.2% higher, while Hong Kong’s Hang Seng Index
HSI,
+0.29%
gained 0.3% and Japan’s Nikkei 225 index
NIK,
-0.26%
dropped 0.3%.
—-Barbara Kollmeyer contributed reporting to this article.
