S&P slightly higher after Fed minutes indicate stable rates

by Jonathan Adams
S&P

But the advances were short-lived, as many market participants question the ability to hold off on a rate hike

Major averages were unchanged on Wednesday, with the S&P finishing slightly higher after the Federal Reserve released minutes from its most recent meeting that reinforced the U.S. central bank’s position to remain patient before raising rates.

The major indexes were unchanged for most of the day but the S&P 500 briefly jumped to a session high after the minutes, in which Fed officials said it would likely take “some time” for substantial further progress on goals of maximum employment and stable prices.

But the advances were minor and short-lived, as many market participants question the ability to hold off on a rate hike for as long as the Fed has stated.

We thought we were going to get something new from the minutes of the Fed meeting, we were oddly mistaken on that one, said Art Hogan, chief market strategist at National Securities in New York. The Fed has been more transparent all of this year about where they stand and they really are not budging from that stance.

The yield on the benchmark 10-year U.S. Treasury note rose late in the session. Still, it stayed below a 14-month high of 1.776% reached on March 30. The recent pullback in yields has helped growth names and lifted technology and communication services stocks on the day.

Unofficially, the Dow Jones Industrial Average gained 17.57 points, or 0.05%, to 33,447.81, the S&P 500 advanced 6.12 points, or 0.15%, to 4,080.06 and the Nasdaq Composite fell 9.60 points, or 0.07%, to 13,688.78.

Value stocks, which include economically sensitive sectors such as materials and industrials, maintain a strong lead this year over their growth counterparts, dominantly tech-related firms.

However, a resurgence in demand for tech stocks in recent sessions amid renewed restrictions in Canada and parts of Europe has raised questions over the longevity of the value trade.

Growth stocks outperformed value shares during the session.

The upcoming earnings season and progress in a multitrillion-dollar infrastructure proposal could decide Wall Street’s path forward.

Analysts have raised expectations for first-quarter S&P 500 earnings increase to 24.2%, according to Refinitiv IBES data as of April 1, versus 21% forecast on Feb. 5.

But the sharp run up in earnings expectations could leave the market primed for disappointment.

JPMorgan Chase & Co Chief Executive Officer Jamie Dimon said the United States could be in store for an economic boom through 2023 if more adults get vaccinated and federal spending continues.



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