IBD Digital 2 months for $20 offerIBD Digital 2 months for $20 offer


Stocks Close Higher As This Piece In The Fed Minutes Sparked Buying

Stocks reversed higher Wednesday after the Fed's latest signals provided some lift to stocks, particularly those sensitive to interest rates.

X

The Dow Jones industrial average climbed 0.2%. General Electric (GE) fell 7% on a gloomy outlook for one of its main businesses. But GE is the lowest-priced Dow component, so it had little effect on the price-weighted industrials. Higher priced financials JPMorgan (JPM) and Goldman Sachs (GS) were off only a fraction.

The tech-heavy Nasdaq composite led with a 0.6% increase even as technology was not broadly higher Wednesday. The top sectors were rate-sensitive plays such as real estate, REITs, homebuilders and utilities.

Biotech, a Nasdaq-heavy group, rose 0.7%, while networking and some software groups rose more than 1%.

The S&P 500 added 0.3% while small caps saw the Russell 2000 close a fraction higher. Volume rose over Tuesday's totals, according to preliminary figures.

Buying picked up after 2 p.m. ET, when minutes of the Fed's early May meeting were released. The policymaking arm of the Federal Reserve seemed flexible on its inflation targets, indicating that it's not in a rush to increase interest rates any faster than planned.

The yield on the benchmark 10-year Treasury note began falling after the release, and was down 6 basis points on the day, just above 3%.

Oddly, banking and financials lagged. SPDR Financial (XLF), SPDR Bank (KBE) and SPDR Regional Bank (KRE) ETFs were down 0.8%. The regional bank ETF had just made a new high Tuesday.

Luxury was in style. Tiffany (TIF) soared to a new high after the jewelry firm beat profit views, raised its outlook and set a $1 billion stock buyback. Tiffany's surge made IBD's jewelry industry group Wednesday's best, and other retail groups were higher. The stock was added to IBD Leaderboard.

But retail giant Target (TGT) gapped down to a 6% loss in heavy trading. The company missed earnings targets due to a slow start to spring weather.

In restaurants, Red Robin Gourmet Burger (RRGB) plummeted 18% to a six-month low after profits missed expectations.

RELATED:

Fed Sees Next Hike Soon, Signals Modest Inflation Overshoot OK

Amazon, Microsoft Price Targets Raised On Cloud Computing Leadership

Target Stock Sinks As Q1 Earnings Fall Short; Delayed Spring Weighs