U.S. Stocks Fluctuate But Manage To Close Mostly Higher

Stocks fluctuated over the course of the trading session on Wednesday before ending the day mostly higher. The tech-heavy Nasdaq rebounded after ending Tuesday’s trading at its lowest closing level since November 2020.

The major averages all closed in positive territory, with the Nasdaq leading the advance. While the Nasdaq surged 170.29 points or 1.5 percent to 11,434.74, the S&P 500 jumped 37.25 points or 1 percent to 3,978.73 and the Dow climbed 191.66 points or 0.6 percent to 32,120.28.

The higher close on Wall Street came as the minutes of the latest Federal Reserve meeting offered few surprises, although the central bank indicated it intends to move “expeditiously” to a more neutral monetary policy stance.

The minutes revealed the Fed plans to use both interest rate increases and reductions in the size of its balance sheet to achieve a neutral posture.

At the meeting, the Fed decided to raise the target range for the federal funds rate by 50 basis points to 0.75 to 1.0 percent, marking the biggest rate hike since May 2000.

The central bank also decided to begin reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities on June 1.

The minutes of the meeting showed most participants agreed additional 50 basis point increases would likely be appropriate at the “next couple of meetings.”

“Many participants judged that expediting the removal of policy accommodation would leave the Committee well positioned later this year to assess the effects of policy firming and the extent to which economic developments warranted policy adjustments,” the Fed said.

The shift toward a more neutral monetary policy stance comes as the Fed seeks to return inflation to its 2 percent goal while sustaining strong labor market conditions.

However, the minutes showed participants agreed a restrictive stance of policy may become appropriate depending on the evolving economic outlook and the risks to the outlook.

The Fed noted risks to the outlook for economic growth were skewed to the downside, while risks to the outlook for inflation were skewed to the upside.

On the U.S. economic front, a report released by the Commerce Department showed new orders for durable goods increased by less than expected in the month of April.

The Commerce Department said durable goods orders rose by 0.4 percent in April after climbing by a downwardly revised 0.6 percent in March.

Economists had expected durable goods orders to advance by 0.6 percent compared to the 1.1 percent jump that had been reported for the previous month.

Excluding orders for transportation equipment, durable goods orders edged up by 0.3 percent in April after surging by 1.1 percent in March. Ex-transportation orders were also expected to increase by 0.6 percent.

Sector News

Housing stocks turned in some of the market’s best performances on the day, with the Philadelphia Housing Sector Index surging by 3.1 percent.

Toll Brothers (TOL) posted a standout gain after the luxury home builder reported better than expected fiscal second quarter results.

Substantial strength was also visible among computer hardware stocks, as reflected by the 2.9 percent jump by the NYSE Arca Computer Hardware Index. The index rebounded after ending the previous session at its lowest closing level in over year.

Retail stocks also turned in a strong performance on the day, driving the Dow Jones U.S. Retail Index up by 2.3 percent. The rebound came after index ended Tuesday’s trading at a two-year closing low.

Urban Outfitters (URBN), Nordstrom (JWN) and Dick’s Sporting Goods (DKS) posted strong gains after reporting their quarterly results.

Energy, airline and semiconductor stocks also showed notable moves to the upside on the day, moving higher along with most of the other major sectors.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Wednesday. Japan’s Nikkei 225 Index fell by 0.3 percent, while China’s Shanghai Composite Index jumped by 1.2 percent.

Meanwhile, the major European markets all moved to the upside over the course of the session. While the French CAC 40 Index advanced by 0.7 percent, the German DAX Index climbed by 0.6 percent and the U.K.’s FTSE 100 Index rose by 0.5 percent.

In the bond market, treasuries turned in a lackluster performance on the day before closing slightly higher. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by 1.1 basis points to 2.749 percent.

Looking Ahead

Reports on initial jobless claims and pending home sales may attract attention on Thursday along with a revised reading on first quarter GDP.

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