By Anora Mahmudova, MarketWatch
NEW YORK (MarketWatch) -- U.S. stocks rebounded on Wednesday
from the previous day's losses and ended the session with solid
gains, led by advances in the consumer discretionary and energy
sectors.
The main benchmarks extended gains after the release of the
minutes from the Federal Open Market Committee meeting, which
showed officials considering options on exiting from ultra-loose
monetary policy and a decision to remain flexible.
The S&P 500 index (SPX)closed 15.20 points, or 0.8%, higher
at 1,888.03. The Dow Jones Industrial Average (DJI) gained 158.75
points, or 1%, to 16,533.06, the best percentage gain in 5 weeks.
The Nasdaq Composite (RIXF) ended the day up 34.65 points, or 0.9%,
at 4,131.54.
The Russell 2000 index swung wildly Wednesday, but managed to
close modestly higher, gaining 5.79 points, or 0.5% to 1,103.69,
according to preliminary data from FactSet.
Read the recap of MarketWatch's live blog of today's
stock-market action.
John Canally, investment strategist and economist at LPL
Financial says the minutes presented a Goldilocks scenario for
equity markets.
"The key takeaway from the Fed minutes for the stock markets was
the fact that the Fed faces an ongoing trade-off between
unemployment and inflation. As inflation is still very low, the Fed
can continue to accommodate to target even lower unemployment
situation," Canally said.
"We think that the bond market will be proven wrong about the
current economy," he added.
Federal Reserve officials examined "several approaches" for the
eventual tightening of monetary policy but only decided to be
flexible, according to the minutes from the April meeting released
Wednesday that suggested that the time for higher interest rates is
drawing closer. Also read: Fed's easy-money strategy won't be easy
to end, official says
Besides the FOMC minutes, several Fed officials delivered
speeches, including Fed Chairwoman Janet Yellen, who delivered the
commencement speech at Yankee Stadium to New York University
students.
Retail in spotlight
Retail companies were in the spotlight again with several
earnings releases ahead of the opening bell.
Shares of Tiffany (TIF) jumped 9.2% after the luxury-jewelry
maker reported sales and earnings that beat estimates, and lifted
its outlook for fiscal 2015.
Target (TGT) shares gained 1% after the discount chain posted
adjusted quarterly earnings of 70 cents a share, versus forecasts
for 71 cents, on sales that roughly matched expectations. On
Tuesday, the company replaced the president of its struggling
Canadian business.
Retail stocks were hit on Tuesday, contributing to broad losses,
after disappointing earnings from TJX Cos. (TJX) and Staples Inc.
(SPLS) among others.
Home-improvement retailer Lowe's (LOW) on Wednesday reported
first-quarter earnings that came in ahead of analyst expectations
by one penny a share, but sales missed estimates. Lowe's also
lifted its per-share earnings view for 2015. Shares closed down
0.2%.
PetSmart Inc. (PETM) dropped 8.3% after it reduced its outlook
as it delivered its quarterly results.
Shares in American International Group Inc. (AIG) rose 1.9%
after Goldman Sachs analysts upgraded the stock to buy from neutral
and raised the price target to $63.
Michael Nannizzi and his team wrote: "We believe AIG will
generate [systematically important financial institution]-high
capital and is best positioned among SIFI candidates to deploy
capital accretively into its core businesses if large-scale
buybacks aren't a near-term option."
Netflix Inc (NFLX) shares rose 5.1% after the Internet
television network announced plans to expand across Europe.
U.K. stocks fall, European stocks gain modestly
In overseas markets, European stocks gained modestly, but U.K.
stocks fell for a third day. Asian stocks posted moderate losses
across the board.
Gold for June delivery (GCM4) lower on Wednesday, at their
lowest close in early two weeks, as a climb in U.S. equities lured
investors away from the precious metal.
Oil for July delivery (CLN4) topped $104 a barrel on Wednesday
to settle at their highest level in a month after a U.S. government
report showed a drop in weekly crude inventories that was much
bigger than the market expected..
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