By Anora Mahmudova and Sara Sjolin, MarketWatch
Fed likely to keep rates lower for longer than market
expected
NEW YORK (MarketWatch) -- U.S. stocks ended marginally lower on
Wednesday, as investors wrestled with interpreting minutes from the
Federal Reserve's latest policy meeting.
Minutes showed that officials were not in a rush to raise
interest rates, as "many" on the Fed said a premature rate hike
would harm the recovery, while only "several" thought a later move
would risk high inflation.
Reaction on the stock market was smaller than in the bond
market. Treasurys rallied, driving yields down 6 basis pints to
2.08%.
The S&P 500 (SPX) closed less than a point below its
previous closing record, reached on Tuesday, ending at 2,099.66.
Energy stocks led losses following a drop in oil prices. Utilities
jumped more than 2%, leading gains.
The Dow Jones Industrial Average (DJI) fell 17.41 points, or
0.1%, to 18,030.17. More than two-thirds of its 30 members ended
lower, with Exxon Mobil and Chevron Corp leading the decliners.
The Nasdaq Composite (RIXF) defied the trend and closed 7.10
points, or 0.1%, higher at 4,906.36.
Anthony Valeri, investment strategist at LPL Financial, said
that markets over the past several weeks got a little cautious,
pricing in a rate hike in June.
"Markets initially welcomed news that lower rates will stay for
longer. Companies love easy money. The Fed has done a good job at
managing market expectations and when Janet Yellen speaks in front
of the Congress, we will get more clarity about the timing of the
first rate hike," he said.
Earlier, markets had been under pressure following a batch of
disappointing economic reports and continued stalemate between
Greece and its creditors.
Chris Gaffney, senior market strategist at EverBank Wealth
Management, said the fact that markets reacted negatively to poor
economic data is a positive, as it indicates markets are less
dependent on the Federal Reserve's policies.
Despite Wednesday's retreat, the S&P 500 held above certain
resistance levels, challenging bearish investors. Jason Hunter,
technical analyst at J.P. Morgan, wrote that he is not looking for
a definitive move higher from the S&P 500's current range,
despite recent gains that have propelled the benchmark index to
record levels.
"While the market can advance further, our broader outlook for a
mostly range-bound first half still stands," Hunter wrote.
Data: Economic releases on Tuesday came in weaker than expected.
U.S. wholesale prices posted a record 0.8% decline in January after
an unprecedented drop in energy costs, the Labor Department said
Wednesday. The drop was larger than expected. Meanwhile,
construction on new U.S. homes dropped 2% in January to an annual
rate of 1.07 million units, as heavy snowfall hindered builders in
some regions such as the Midwest and Northeast. The numbers matched
consensus forecast of economists polled by MarketWatch.
Industrial production rose a seasonally adjusted 0.2% in
January, the Federal Reserve said Wednesday. Economists polled by
MarketWatch had expected a 0.4% rise. Another sign of weakness came
in a slight downward revision to output in the past four
months.
Angie's List Inc. (ANGI) shares surged 59% to $7.77, after the
company posted quarterly profit and revenue that topped Wall
Street's expectations.
Boston Scientific Inc. (BSX) stock jumped 12% and was the top
performer on the S&P 500. The biotech company late Tuesday said
it has settled with Johnson & Johnson Inc. (JNJ) over the
acquisition of Guidant Corp. in 2004.
Fossil Group Inc.(FOSL) dropped 16% after the company late
Tuesday reported adjusted fourth-quarter earnings that missed
expectations, along with revenue that disappointed.
For more on today's notable movers, read our Movers &
Shakers column.
Other markets: European stock markets moved firmly higher,
boosted by optimism that the Greek debt drama could soon come to an
end. Asian markets also got a lift from Greece and closed with
gains.
Crude-oil prices (CLH5) fell 3.3%, ending a three-session
winning streak, that lifted priced more than 9%. Gold prices
settled at the lowest level in nearly seven weeks, falling 0.7% to
$1,200.20. The dollar (DXY) which was higher earlier, fell against
its main rivals after the Fed minutes.
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