On Wednesday, stocks reversed early losses after the release of the minutes of the Federal Reserve’s July meeting.
The minutes were typically vague, with caution prevailing as the central bank appears reluctant to do anything prior to the elections. Although there is a chance of a rate increase in September, the consensus among traders is that a December hike is more likely.
While the broader market S&P 500 was down as much as 0.4% prior to the Fed’s announcement, the index managed to close up 0.2%.
Utility stocks led the rally, up 1.5%, followed by financials, up 0.3%. Consumer discretionary was the worst-performing sector, off 0.2%.
In earnings news, Target Corporation (NYSE:TGT) lost 6.4% after reporting sales at existing stores fell and cutting its full-year guidance. Lowe’s Companies, Inc. (NYSE:LOW) lost 5.7% on a weaker outlook. And Urban Outfitters, Inc. (NASDAQ:URBN) soared 15.4% on better-than-expected sales.
Oil advanced 0.5% on Wednesday to $46.79 a barrel after a report showed U.S. stockpiles fell by 2.5 million barrels last week. Analysts had expected an increase.
At Wednesday’s close, the Dow Jones Industrial Average gained 22 points at 18,574, the S&P 500 rose 4 points to 2,182, the Nasdaq added 2 points at 5,229, and the Russell 2000 fell 3 points to 1,228.
The NYSE Composite’s primary exchange traded 787 million shares with total volume of 3.4 billion. The Nasdaq crossed 1.7 billion shares. On the Big Board, advancers outpaced decliners by 1.1%, but on the Nasdaq, decliners led by 1.4-to-1. Block trades on the NYSE increased to 7,013 from 6,716 on Tuesday.
The Dow Jones Industrial Average may have caused some investors’ hearts to skip a beat as it threatened to plow through the support line of the bullish “V” channel on Wednesday. But when the Fed announced that it would not raise rates, the index reversed course and closed less than 9 points from its high of the day.
Conclusion
The major indices all had a similar reaction to the central bank’s reluctance to take action, reversing within several minutes of the Fed’s reprieve. Technically, support has held, and we should look forward to a test of the highs on each index.
Today’s Trading Landscape
To see a list of the companies reporting earnings today, click here.
For a list of this week’s economic reports due out, click here.
