U.S. Stocks Rise Ahead of Fed Minutes
Investors await Fed minutes, corporate-earnings reports
U.S. stocks opened higher Wednesday ahead of the release of minutes from the Federal Reserve’s latest meeting and first-quarter earnings.
The Dow Jones Industrial Average added 77 points, or 0.4%, to 17952. The S&P 500 rose seven points, or 0.3%, to 2083 and the Nasdaq Composite gained 27 points, or 0.6%, to 4937.
Investors on Wednesday will get a look into the debate at the Fed about when to raise interest rates, widely expected this year. The minutes from the Fed’s March 17-18 policy meeting will be released at 2 p.m. EDT. At that meeting, the central bank opened the door to raising rates as early as June, while indicating it is in no hurry to do so.
Still, the weak economic reports that have been released in the wake of the meeting may make the minutes less relevant than usual for investors, said Bill Stone, chief investment strategist at PNC Wealth Management.
ENLARGE“Prior to those minutes, we had seen the softness in some of the other numbers, but it hadn’t spread to the payrolls numbers,” he said, referring to the weak employment report for March, which is closely watched by the Fed.
Mr. Stone added that he’s focusing on comments from Fed officials this week, which will show how the Fed is viewing the recent weak jobs data. William Dudley, president of the Federal Reserve Bank of New York, on Monday blamed much of the economic weakness on short-term factors, such as bad weather, and said he still expects the path of rate increases to be slow.
Fed governor Jerome Powell on Wednesday noted the strength in job creation over the past two years, even with March’s slowdown in hiring, and said he expects progress in the labor market to continue.
Stocks ended slightly lower on Tuesday, giving up gains in the last hour of trading. The Dow fell less than 0.1% to 17875.42 and the S&P 500 slipped 0.2% to 2076.33.
Economic reports have indicated a slowdown in growth at the start of the year. Now, investors are waiting for reports from companies to see how they performed in the first quarter. Given the dollar’s drag on results at multinational companies and low oil prices weighing on profits at energy companies, expectations are low. Analysts surveyed by FactSet expect earnings at S&P 500 companies to fall 4.9% from a year earlier, according to FactSet.
Alcoa Inc. reports first-quarter earnings Wednesday after the closing bell, unofficially marking the start to the reporting season.
Mr. Stone of PNC Wealth Management said he expects stocks to gain this year, but said the move higher will be choppier.
“Stocks aren’t cheap anymore, but I can still say that they look relatively attractive versus other opportunities that we have, particularly bonds and cash,” he said. “They don’t scream ‘buy me,’ but they don’t scream ‘sell me,’ either.”
European stocks climbed to a 15-year high, boosted by gains in oil and gas stocks. Royal Dutch Shell PLC has agreed to buy BG Group PLC for about $70 billion in a deal that would create the world’s largest independent producer of liquefied natural gas. The Stoxx Europe 600 rose 0.3%, after closing at its highest level since 2000 on Tuesday. Germany’s DAX slipped 0.3% and France’s CAC 40 was nearly flat.
In other markets, gold futures lost 0.3% to $1207.60 an ounce. Crude-oil futures fell 2.3% to $52.74 a barrel.
Treasury prices were little changed. The yield on the 10-year note traded at 1.895%, compared with 1.893% on Tuesday. Yields rise as prices fall.
In corporate news, Tesla Motors Inc. is upgrading the base model of its Model S electric sedan, giving it a more capable battery and all-wheel drive. Shares rose 2.6%.
Merck & Co. said its hepatitis C drugs have been designated breakthrough therapies by the U.S. Food and Drug Administration. The designation is given to experimental medicines if early tests suggest they will be a substantial improvement over existing options. Shares rose 1%.
Write to Saumya Vaishampayan at [email protected]