Wall Street soars after Fed policy meeting
NEW YORK — U.S. stocks rallied on Wednesday after minutes from the Federal Reserve’s latest policy meeting showed a more supportive central bank than investors had previously expected.
All three major U.S. stock indexes ended up more than 1 percent, with eight of the 10 S&P 500 sector indexes closing higher. Internet and biotech stocks were among the day’s biggest gainers.
Federal policymakers were unanimous in wanting to ditch the thresholds they had been using to telegraph a policy tightening, according to minutes of a meeting last month that shed little new light on what might prompt an eventual interest-rate rise.
“People are taking solace in the idea that the Fed may be more accommodative than previously thought, for longer than previously thought,” said Steve Sosnick, equity-risk manager at Timber Hill/Interactive Brokers Group in Greenwich, Conn.
“That’s giving the lift to stocks.”
Alcoa Inc. shot up 3.8 percent to end at $13. The stock ranked as one of the S&P 500’s best performers after the aluminum producer’s earnings, excluding restructuring charges and other special items, exceeded analysts’ expectations.
S&P 500 companies’ first-quarter earnings are projected to have increased just 1 percent from a year ago, Thomson Reuters data showed, down sharply from the start of the year, when profit growth was estimated at 6.5 percent.
The Dow Jones industrial average rose 181.04 points or 1.11 percent, to end at 16,437.18. The S&P 500 gained 20.22 points or 1.09 percent, to finish at 1,872.18. The Nasdaq Composite added 70.914 points or 1.72 percent, to close at 4,183.90.
U.S. stocks had advanced in the previous session to snap a three-day losing streak as investors bought beaten-down social media and Internet shares.
Despite the three-day selloff, the benchmark S&P 500 index managed on Tuesday to hold above its 50-day moving average around 1,840, a key support level. The index has successfully defended the 1,840 area several times over the past month.
In Wednesday’s regular session, the S&P 500 swung from a session high of 1,872.43, just a notch above its closing level, to an intraday low at 1,852.38.
The Nasdaq biotechnology index rose 4.1 percent to close at 2,455.83 on Wednesday, while the Global X social media index gained 3.3 percent to end at 19.11.
“In recent days, in general, large-caps outperformed small-caps, and low-beta companies outperformed those with higher betas,” U.S. Bank Wealth Management’s equity research team said in a note to clients.
Low beta refers to less volatile stocks that also offer less potential return.
“While investor sentiment remains fragile, we continue to maintain a constructive outlook for equities, believing that the path of least resistance is still up.”
In the latest snapshot of the economy, Commerce Department data showed that U.S. wholesale inventories rose at a slower pace of 0.5 percent in February, in line with expectations, after a revised gain of 0.8 percent in January, which could support views that restocking did not help the economy in the first quarter.
Going against the day’s sharp advance, shares of Intuitive Surgical Inc. slid 6.8 percent to close at $456.64 after the company estimated first-quarter revenue well below analysts’ expectations mainly due to a 60 percent drop in sales of its flagship da Vinci robot system.
Shares of Blackstone-backed hotel chain La Quinta Holdings Inc. made a subdued market debut as investors took the view that the stock was fully priced in a crowded IPO market. The stock closed up 0.7 percent at $17.12.
About 6.3 billion shares changed hands on U.S. exchanges, below the 6.9 billion average so far this month, according to data from BATS Global Markets.
Advancers outnumbered decliners on the New York Stock Exchange by a ratio of 11 to 4, while on the Nasdaq, three stocks rose for every one that fell.