Stocks close mostly higher as Fed minutes say hike coming 'relatively soon'

After yesterday's down day on earnings worries, U.S. stocks closed mixed to slightly higher Wednesday as traders reacted to the release of the minutes of last month's Federal Reserve meeting, which suggested an interest rate hike is coming "relatively soon."

Most investors say the Fed minutes, which noted that it was a "close call" to hold off on rate hikes at the September meeting, suggests the Fed is still on track for a December rate hike if economic data, including the labor market, continues to come in strong. That message jibes with futures markets, which continues to price in a nearly 70% chance of a hike at the December meeting.

The Dow Jones industrial average rose 15.54 points, or 0.1%, to 18,144.20. The broad Standard & Poor's 500 stock index gained 2.45, or 0.1%, to 2139.18 and the Nasdaq fell 7.77, or 0.2%, to 5239.02.

The Fed minutes delivered no surprises, says Kate Warne, investment strategist at Edward Jones.

"The minutes are consistent with another rate hike in December but didn't make a December move more likely," Warne told USA TODAY. "Some (Fed members) wanted to move relatively soon while others wanted to wait for more convincing evidence of rising inflation. This is still a Fed that's cautious, patient and positive for rising stocks over time."

A poor start to the third-quarter earnings season Tuesday got Wall Street's attention. A miss from aluminum maker Alcoa knocked the Dow down 200 points and raised concerns that the hoped-for profit rebound won't materialize in the July-thru-September quarter. With just 27 companies in the S&P 500 having reported results so far, earnings are seen contracting 0.7%, according to earnings-tracker Thomson Reuters, putting earnings on track for their fifth straight quarter of negative growth.

While Alcoa is no longer in the Dow, nor is it considered the economic bellwether it once was, the broad stock market has tended to struggle after Alcoa, whose earnings report is viewed as the unofficial start to earnings season, plunges after a poor earnings report. In fact, after the prior 10 times Alcoa fell more than 5% on earnings report day, the S&P 500 was down an average 2.5% for the remainder of the earnings season, according to Bespoke Investment Group.

Up next is a profit report from railroad CSX today after the closing bell, then Wynn Resorts and Delta Airlines tomorrow and major banks Wells Fargo, JPMorgan Chase and Citigroup Friday.

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The main event today is the Fed minutes.

At its September meeting the U.S. central bank opted to keep rates unchanged, but left the door open for a rate hike later this year. There was also division among the Fed voters, as three dissenters called for a hike last month. Wall Street will be watching the minutes for clues as to the timing of the next hike, although futures markets are already pricing in a nearly 70% chance the Janet Yellen-led Fed will move for the first time this year at its December meeting, according to CME Group.

On Fed minute release days in 2016, the S&P 500 has posted average gains of 0.24% heading into the 2 p.m. release, and gained an additional 0.11% into the close for an average daily gain of 0.35%, according to Bespoke. However, stocks have fallen 0.71% the day after the release of the minutes, as investors come to grips with the reality that the Fed will eventually hike rate at some point.

"It’s been a relatively calm start to trading on Wednesday as investors await the release of the September Fed minutes and look for rate hike clues ahead of the final two meetings of the year," Craig Erlam senior market analyst at OANDA, told USA TODAY via e-mail. "Of those two meetings, November appears all but off the table coming a week before the U.S. presidential election and not being accompanied by a press conference, giving Yellen an opportunity to explain the decision and what it means for monetary policy going forward."

The rising odds of a Fed rate hike pushed the yield on the 10-year U.S. Treasury note above 1.8% early in Wednesday's session to a four-month high. The 10-year note last traded above 1.8% back on June 3 and it last closed above that level on June 2. It's latest yield is 1.771%.

New York Fed president William Dudley, a close ally of Yellen, said in a speech Wednesday that the Fed can be "gentle" in raising rates since the U.S. economy has "plenty of room to run."

Another weight on the market was a 1.2% drop in the value of U.S.-produced crude which slipped to $50.19 per barrel.

In currencies, the U.S. dollar continued to move higher, edging up 0.13%. And in the UK the British pound stabilized, rising 0.6%, after UK Prime Minister gave the OK for parliamentary vote related to her plans for Britain's exit from the European Union. That raised some hope that the UK would not opt for a so-called "hard Brexit," a phrased used to describe a deal in which Britain keeps control of its borders but gets less economically friendly access to the single-market EU.

Stocks were lower in Asia, with Japan's Nikkei 225 off 1.1% and Hong Kong's Hang Seng index down 0.6%.

In Europe, the broad Stoxx Europe 600 index was 0.5% lower and Germany's DAX index was off 0.6% and the CAC 40 in Paris was off 0.5%.