US stock market closes higher as US Fed minutes were positive
Wall Street ended the day higher on Wednesday, boosted by minutes from the Federal Reserve’s most recent monetary policy meeting, which revealed that officials agreed that the US economy was quite robust as they struggled to control inflation without sparking a recession.
The minutes from the Federal Open Market Committee’s May meeting, which resulted in a 50-basis-point hike in the Fed funds target rate – the largest increase in 22 years – revealed that the majority of the committee’s members believed that more rate hikes would “likely be appropriate” at the committee’s upcoming June and July meetings.
“Consensus is a positive thing,” said Ross Mayfield, an investment strategy analyst at Baird in Louisville, Kentucky. “There isn’t much doubt about what needs to be done in the short term.” “By the time (the Fed) comes to September, they’ll have plenty of economic data to make their decision from there,” Mayfield added.
Early in the day, Wall street the three major U.S. market indexes gyrated amid rising concerns arising from business and consumer surveys, economic statistics, and corporate earnings reports, all of which pointed to a cooling American economy – even as the Fed prepares to slam the brakes on decades-high inflation.
Fears that the Fed’s excessively aggressive interest rate hikes may send the economy into recession, despite evidence that inflation peaked in March, have fanned such fears. Mayfield added, “There’s some validity to the argument that inflation is doing (the Fed’s) job for them.” “A cooling is already taking place, and financial conditions have tightened in the previous month as a result of dollar strength and equity market downturn.”
The Commerce Department is expected to announce its second estimate of first-quarter GDP on Thursday, with economists anticipating a slightly shallower fall than the 1.4 percent quarterly annualized drop previously reported. On Friday, the Personal Consumption Expenditures (PCE) report will be released, which will provide more information about consumer spending and whether inflation peaked in March, as other signs imply.
The Dow Jones Industrial Average increased by 191.66 points, or 0.6 percent, to 32,120.28, the S&P 500 increased by 37.25 points, or 0.95 percent, to 3,978.73, and the NASDAQ Composite increased by 170.29 points, or 1.51 percent, to 11,434.74. Nine of the S&P 500’s 11 major sectors increased, with consumer discretionary stocks leading the way with a 2.8 percent rise.
Amazon.com Inc and Tesla Inc gave the S&P 500 and NASDAQ the biggest boosts, climbing 2.6 percent and 4.9 percent, respectively. Nordstrom Inc, a department store operator, rose 14.0 percent following its bullish annual profit and growth forecasts. Wendy’s stock rose 9.8% after a regulatory filing revealed that shareholder Nelson Peltz was mulling a takeover bid.
Nvidia Corp’s stock dropped more than 8% in after-hours trading after the company’s second-quarter sales projection fell short of forecasts. On the NYSE, advancers exceeded decliners by a 3.56-to-1 ratio; on the NASDAQ, advancers outpaced decliners by a 2.22-to-1 ratio. The S&P 500 added three new 52-week highs and 32 new lows, while the NASDAQ Composite added 23 highs and 255 lows. On U.S. exchanges, volume was 11.19 billion shares, compared to a total session average of 13.27 billion shares over the previous 20 trading days.
