Wall Street rises as Federal Reserve minutes meet expectations

  • Fed Minutes: 50 basis points hike ‘likely’
  • Nordstrom climbs after raising earnings expectations
  • Nvidia Q2 revenue forecast falls short of expectations
  • Indexes up: Dow 0.60%, Standard & Poor’s 0.95%, Nasdaq 1.51%

NEW YORK (Reuters) – Wall Street closed higher on Wednesday, boosted by minutes after the Federal Reserve’s latest monetary policy meeting, which showed policymakers feel unanimously that the U.S. economy is too strong as they struggle to rein in inflation without triggering a recession.

Minutes of the FOMC meeting in May, which culminated in a 50 basis point raise in the federal funds target price – the biggest jump in 22 years – showed most of the committee’s members showed that more such hikes are likely to be “appropriate” at its upcoming meetings in June and July. Read more

“Consolidation of opinions is a good thing,” said Ross Mayfield, investment strategy analyst at Bird Corporation in Louisville, Kentucky. “There is a lack of uncertainty about what to do in the near term.”

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“By the time they (the Fed) get into September, they’ll have a lot of economic data to take a step from there, so they continue to maintain selectivity,” Mayfield added.

All three major US stock indexes moved earlier in the day amid heightened tensions stemming from business and consumer surveys, economic data and corporate earnings reports pointing to a cold US economy – even as the Federal Reserve prepares to dump a bucket of cold water on it to deal with contracts. High inflation.

Fears that excessive interest rate hikes by the Federal Reserve could push the economy into recession despite evidence that inflation peaked in March have fueled those fears.

“There is some credibility to the idea that inflation is doing the (Fed) job for them,” Mayfield said. “There is a lull already happening, and financial conditions have tightened over the past month due to the strong dollar and weak stock market.”

On Thursday, the Commerce Department is due to release its second comparison of GDP for the first quarter, which analysts expect will slow a contraction slightly less than the 1.4% quarterly decline originally reported.

Friday’s PCE report will follow, which will provide more clues on consumer spending and whether inflation peaked in March, as other indicators have suggested.

A person walks past the New York Stock Exchange (NYSE) in Manhattan, New York City, US, May 19, 2022. REUTERS/Andrew Kelly

The Dow Jones Industrial Average increased 191.66 points, or 0.6 percent, to 32,120.28 points, the Standard & Poor’s 500 increased 37.25 points, or 0.95 percent, to 3,978.73 points, and the Nasdaq Composite increased 170.29 points, or 1.51%, to 11,434.74.

Nine of the S&P 500’s 11 major sectors were up, with consumer discretionary shares (.SPLRCD) topping the group with a gain of 2.8%.

Amazon.com Inc (AMZN.O) and Tesla Inc (TSLA.O) provided the strongest gains for the S&P 500 and Nasdaq, up 2.6% and 4.9%, respectively.

Department store operator Nordstrom Inc (JWN.N) jumped 14.0% following its upbeat forecast for annual earnings and revenue. Read more

Fast-food chain Wendy’s Co (WEN.O) jumped 9.8% after a regulatory filing revealed that shareholder Nelson Peltz was considering a possible takeover of the company. Read more

Shares of Nvidia Corp (NVDA.O) fell more than 8% in after-hours trading after the company’s second-quarter revenue forecast missed expectations. Read more

Advance issues outnumbered declining issues on the New York Stock Exchange by 3.56 to 1; On the Nasdaq, the ratio was 2.22 to 1 in favor of advanced traders.

S&P 500 set three new highs in 52 weeks and 32 new lows; Nasdaq Composite recorded 23 new highs and 255 new lows.

Volume on US exchanges was 11.19 billion shares, compared to an average of 13.27 billion shares for the full session over the last 20 trading days.

(The story has been rewritten to change the “estimates” to “expectations” in the third title on the Nvidia website)

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Stephen Kolb reports. Additional reporting by Anisha Sircar and Devik Jain in Bengaluru; Editing by Jonathan Otis

Our Standards: Thomson Reuters Trust Principles.

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