By Alexandra Scaggs
U.S. stocks extended their winning streak Wednesday after a
brief turn lower on jitters about the outlook for Federal Reserve
policy.
Stocks had initially turned lower, and prices of ultrasafe
Treasury bonds fell, after minutes from the Federal Reserve's
latest policy-setting meeting indicated officials debated whether
to raise interest rates sooner than expected.
The Dow Jones Industrial Average rose 59.54 points, or 0.4%, to
16979.13. The S&P 500 index gained 4.91 points, or 0.2%, to
1986.51.
Technology stocks lagged behind, with the Nasdaq Composite Index
closing nearly flat, slipping less than 0.1% to 4526.48.
Wednesday was the third-straight advance for the Dow and the
S&P 500, leaving the S&P just 0.1% below its all-time high.
The session was quiet, however, with the third-lowest trading
volume for a full session this year.
Stocks quickly recouped their losses in afternoon trading as
investors brushed off the Fed minutes. Treasury prices also rose
from their session lows, though the yield on the 10-year note still
rose for the session, to 2.426%.
Traders and strategists said investors were looking ahead to a
speech later this week from Fed Chairwoman Janet Yellen at an
annual gathering of central bankers in Jackson Hole, Wyo. European
Central Bank President Mario Draghi will speak as well.
"The minutes are backward-looking and Yellen's speaking Friday,"
said Michael Antonelli, sales trader with Robert W. Baird. "We're
just kind of treading water until then."
Investors have been keeping a close eye on when the Fed could
raise interest rates, with short-term rates having been held near
zero since December 2008.
"Markets are nervous about what the Fed's [rate increase] is
going to look like," said David Lebovitz, global markets strategist
for J.P. Morgan Funds.
But some investors said that if economic growth remains steady
and interest rates don't rise sharply, they are comfortable with a
rate increase coming sooner than expected.
"They have to do it sooner or later," said Mark Spellman, who
manages $80 million in the Alpine Equity Income Fund. "The question
is, how high do they go? But in this case, it's safe to say it's
going to be a very slow, deliberate process."
Still, Mr. Spellman is avoiding some stocks that could get hurt
if interest rates rise, such as utilities shares. He has recently
bought stocks of insurance companies such as Prudential Financial
Inc. and MetLife Inc., which he expects will benefit from higher
rates.
In corporate news, Home Depot led the Dow higher, gaining 2.9%.
That advance came on the back of Tuesday's 5.6% gain on strong
second-quarter earnings and upbeat housing-market data. Its
competitor Lowe's rose 1.6% after reporting strong second-quarter
results but lowering its sales outlook for the year.
PetSmart Inc. said it would explore strategic alternatives,
including a possible sale. The company said it would implement a
cost-reduction program. Shares rose 1.2%.
European stocks fell, with the Stoxx Europe 600 Index down 0.1%.
In commodity markets, crude-oil futures rose 1.7% to $96.07 a
barrel. Gold futures slipped 0.1% to $1,293.40 an ounce.
Write to Alexandra Scaggs at alexandra.scaggs@wsj.com