By Anora Mahmudova and Sara Sjolin, MarketWatch
Federal Reserve officials lean toward low rates "for a
longer"
NEW YORK (MarketWatch) -- After an initial positive reaction to
the Fed news, U.S. stocks inched lower, returning to levels prior
to the minutes from the latest Federal Reserve policy meeting,
which showed that officials were not in a rush to raise interest
rates.
"Many" on the Fed said a premature rate hike would harm the
recovery, while only "several" thought a later move would risk high
inflation.
Reaction on the stock market was smaller than in the bond
market. Treasurys rallied, driving yields down 9 basis pints to
2.0%.
The S&P 500 (SPX) was off five points to 2,095.92 -- the
same level before the Fed minutes. Energy stocks led losses
following a drop in oil prices. Utilities jumped and were among the
three sectors still in the green.
The Dow Jones Industrial Average (DJI) traded lower, but stayed
above 18,000. The blue-chip index on Tuesday closed within six
points of its record set Dec. 26.
The Nasdaq Composite (RIXF) hovered near its previous closing
level Tuesday at 4,896.6.
Anthony Valeri, investment strategist at LPL Financial, said
that markets over the past several weeks got a little cautious,
pricing in a rate hike in June.
"Markets initially welcomed news that lower rates will stay for
longer. Companies love easy money. The Fed has done a good job at
managing market expectations and when Janet Yellen speaks in front
of the Congress, we will get more clarity about the timing of the
first rate hike," he said.
Earlier, markets had been under pressure following a batch of
disappointing economic reports and continued stalemate between
Greece and its creditors.
Chris Gaffney, senior market strategist at EverBank Wealth
Management, said the fact that markets reacted negatively to poor
economic data is a positive, as it indicates markets are less
dependent on the Federal Reserve's policies.
Despite Wednesday's retreat, the S&P 500 held above certain
resistance levels, challenging bearish investors. Jason Hunter,
technical analyst at J.P. Morgan, wrote that he is not looking for
a definitive move higher from the S&P 500's current range,
despite recent gains that have propelled the benchmark index to
record levels.
"While the market can advance further, our broader outlook for a
mostly range-bound first half still stands," Hunter wrote.
Data: Economic releases on Tuesday came in weaker than expected.
U.S. wholesale prices posted a record 0.8% decline in January after
an unprecedented drop in energy costs, the Labor Department said
Wednesday. The drop was larger than expected. Meanwhile,
construction on new U.S. homes dropped 2% in January to an annual
rate of 1.07 million units, as heavy snowfall hindered builders in
some regions such as the Midwest and Northeast. The numbers matched
consensus forecast of economists polled by MarketWatch.
Industrial production rose a seasonally adjusted 0.2% in
January, the Federal Reserve said Wednesday. Economists polled by
MarketWatch had expected a 0.4% rise. Another sign of weakness came
in a slight downward revision to output in the past four
months.
Angie's List Inc. (ANGI) shares surged more than 50% after the
company posted quarterly profit and revenue that topped Wall
Street's expectations.
Boston Scientific Inc. (BSX) stock jumped and was the top
performer on the S&P 500. The biotech company late Tuesday said
it has settled with Johnson & Johnson Inc. (JNJ) over the
acquisition of Guidant Corp. in 2004.
Fossil Group Inc.(FOSL) dropped more than 17% after the company
late Tuesday reported adjusted fourth-quarter earnings that missed
expectations, along with revenue that disappointed.
For more on today's notable movers, read our Movers &
Shakers column.
Other markets: European stock markets moved firmly higher,
boosted by optimism that the Greek debt drama could soon come to an
end. Asian markets also got a lift from Greece and closed with
gains.
Crude-oil prices (CLH5) fell 1.2% ahead of inventories, while
metals prices were mostly lower. The dollar (DXY) rose against most
other major currencies.
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