Up down, up down, up down…What a yoyo kind of day. I did not expect such a spike after the Fed minutes release. It was almost certain that a rate hike was never going to happen at the June meeting considering the last GDP reading. However, that spike higher in equities did not last very long and we are back to flat again in the markets for a second day in a row.
Janet Yellen is speaking on Friday and I think traders will be more focused on that than the minutes of a meeting held weeks ago.
Now that there has been 2 days of uncertainty, and the fact that there has been only a very shallow dip so far from the high, we are either going to rally tomorrow or see a decent pullback down to 2105 – 2115 in the S&P. I believe that there is more upside ahead, but we may have to wait for Ms Yellen to spark the march higher.
U.S. stocks traded sideways on Wednesday following a record close on the Dow, failing to shake off an initially tepid response to the Fed meeting minutes.
The major indices rose modestly before pulling back, with the S&P 500 setting a new intraday high and the Nasdaq briefly trading above its record close.
The Fed minutes showed policymakers mostly brushed aside the wobbly start the U.S. economy has had in 2015, attributing the lack of growth to “transitory” factors that will abate soon. Only a few policymakers supported a June rate hike.
Investors are also looking ahead to a Friday speech from Fed chief Janet Yellen for possible new clues on when the central bank may start raising interest rates.
Art Hogan, chief market strategist at Wunderlich Securities, said the speech would probably be “more provocative” than the minutes since Yellen’s remarks will account for economic reports since the April Fed meeting.
Yellen is scheduled to speak Friday at the Greater Providence Chamber of Commerce Economic Outlook Luncheon at 1 p.m. She is not expected to take questions.
The Federal Reserve Open Market Committee was scheduled to release the minutes from its April meeting at 2 p.m. The statement from that month removed all calendar references to the timing of a short-term interest rate hike.
Chicago Fed President Charles Evans said in Munich on Wednesday that a rate hike is not likely to be appropriate until early 2016, Reuters reported.
Earlier, stocks fluctuated around the flatline. The Dow transports briefly fell more than 1.5 percent, hitting a 7-month low, as airline stocks declined. Southwest dipped more than 8.5 percent to lead laggards after the company said it expects a decline in passenger revenue per available seat mile for the quarter.
The Dow Jones industrial average closed at a record for the second day in a row on Tuesday, ending below and intraday high of 18,351.36 set earlier that session. The S&P ended mildly lower after closing at a record on Monday.
Authorities on Wednesday fined JPMorgan Chase, Citigroup, Barclay’s, RBS and UBS a total of more than $5.5 billion for rigging rates, the U.S. Department of Justice said on Wednesday. The U.S. Federal Reserve fined all five banks and also Bank of America.
European equities managed to close higher on Wednesday, but struggled to hold momentum from the previous day’s strong gains as concerns about Greece weighed.
The Greek government’s parliamentary speaker said on Wednesday that Athens will not make the June 5 payment unless it has reached a deal with its creditors, Reuters reported.
The European Central Bank raised its emergency funding cap for Greek banks by 200 million euros to 80.2 billion euros ($89.1 billion), Dow Jones reported.
Earnings: Hewlett-Packard, Intuit, Williams-Sonoma, Gap, Trina Solar, Toro, The Buckle, Ross Stores, Aeropostale, Aruba Networks, Brocade
08:30 a.m.: Initial claims
10:00 a.m.: Existing home sales
01:30 p.m. Fed Vice Chairman Stanley Fischer on economic outlook at ECB forum
07:00 p.m.: San Francisco Fed President John Williams on impact of form