By William Watts and Barbara Kollmeyer, MarketWatch
Fed minutes, earnings loom
NEW YORK (MarketWatch) --U.S. stocks inched modestly higher
after an initial shock from a report showing rising oil inventories
unsettled traders
The Energy Information Administration reported that domestic
crude inventories rose a higher-than-expected 10.9 million barrels
(http://www.marketwatch.com/story/oil-futures-extend-drop-after-crude-inventories-jump-2015-04-08)
to 482.4 million, an increase that comes as the market has been
fretting about a global oil glut.
The oil inventory news comes as investors await minutes of the
Federal Reserve's March policy meeting for clues on interest rates
and a launch of the unofficial start to corporate-earnings season
with Alcoa reporting after Wednesday's close.
The S&P 500 (SPX) was trading marginally higher, up about 6
points, or 0.3%, to 2082.8, after trading higher earlier in the
session, while the Dow Jones Industrial Average (DJI) was up about
45 points, retreating from around 90 points earlier in the session,
to 17,918. The Nasdaq Composite (RIXF) was higher by 39 points, or
0.8%, to 4,949.
Trading in the S&P 500 got a boost from Mylan N.V. (MYL),
which jumped 12% on the heels of news that it was proposing to
acquire Dublin-based pharmaceutical company Perrigo Co. PLC
(http://www.marketwatch.com/story/mylan-offers-to-buy-perrigo-for-205-a-share-in-cash-and-stock-2015-04-08)(PRGO)
for $205 a share. Perrigo's shares were soaring 25% on the
news.
About seven of the 10 sectors of the S&P 500 were trading
higher, led by health care and consumer discretionary, while
utilities and energy were lower.
Visa Inc. (V) and Home Depot Inc. (HD) were leading gainers
among the Dow industrial components.
A weak jobs report on Friday has convinced market participants
the Fed is unlikely to hike rates in June, "but the real question
for investors is whether the Fed agrees or if it has a different
plan," said Rebecca O'Keeffe, head of investment at stockbroker
Interactive Investor, in a note.
The Fed minutes could provide more clues as to when the Fed will
begin a shift toward "normalizing" monetary policy, both in terms
of rate hikes and reducing the assets held on the central bank's
balance sheet, she said.
Ahead of the release of FOMC minutes, New York Fed President
William Dudley suggested that the bar for raising rates in June is
high
(http://www.marketwatch.com/story/feds-dudley-bar-higher-for-june-move-2015-04-08),
given recent signs of softness in the U.S. economy.
Need to know: Sideways market looks to Fed minutes, earnings
kickoff for direction
(http://www.marketwatch.com/story/sideways-market-looks-to-fed-minutes-earnings-kickoff-for-direction-2015-04-08)
Energy shares were expected to remain in focus on Wednesday.
Oil prices
(http://www.marketwatch.com/story/oil-prices-ease-ahead-of-us-inventory-data-record-saudi-output-2015-04-08)(CLK5)
swooned after EIA's report, indicated that domestic crude oil
inventories have reached their highest level for this time of the
year in 80 years. Crude-oil futures were already under pressure
earlier in the session on news that Saudi Arabia had raised its
output to record levels
(http://www.marketwatch.com/story/saudi-arabia-crude-output-at-record-high-in-march-2015-04-08).
In a sign of how lower oil prices are shaking up the industry,
Royal Dutch Shell Group PLC (RDSA) (RDSB) said it would buy BG
Group in a deal worth nearly $70 billion
(http://www.marketwatch.com/story/shell-to-buy-bg-group-in-696-billion-deal-2015-04-08).
U.S.-listed shares of Shell fell 4% in premarket, but shares of BP
PLC (BP) rose 3.5% as the deal was expected to trigger more
consolidation speculation in the industry.
Shell CEO: BG deal isn't a bet on oil prices
(http://www.marketwatch.com/story/shell-ceo-bg-deals-not-a-bet-on-oil-price-2015-04-08)
(http://www.marketwatch.com/story/shell-ceo-bg-deals-not-a-bet-on-oil-price-2015-04-08)Also:
Who's the next target for oil M&A after the Shell-BG deal?
(http://www.marketwatch.com/story/whos-the-next-target-for-oil-ma-after-the-shell-bg-deal-2015-04-08)
Fed minutes ahead: The minutes of the Federal Open Market
Committee's March meeting will be released at 2 p.m. Eastern. Nour
Al-Hammoury, chief market strategist at ADS Securities, said
because the minutes won't cover the recent weak jobs report, a
change in guidance isn't likely. Therefore the report could turn
into a "nonevent", he said in a note.
Federal Reserve Gov. Jerome Powell, in a speech, said he expects
economic conditions to support a rate hike
(http://www.marketwatch.com/story/feds-powell-sees-first-rate-increase-later-this-year-2015-04-08)
later this year. Powell also said he wasn't troubled by equity
valuations and that the Fed was unlikely to put "its toe in the
water" and declare overly high stock prices to be a justification
for a rate hike.
Stocks to watch: Outside of oil stocks, Alcoa(AA) will be on
center stage after the closing bell with analysts surveyed by
FactSet expecting first-quarter earnings of 26 cents a share. Bed
Bath & Beyond Inc.(BBBY) will also report after the market's
close.
Shares of Apple Inc. (AAPL) edged own 0.2% after a downgrade by
Société Générale.
Rite Aid Corp. (RAD) shares rose. The company posted
better-than-expected profit for its fiscal fourth quarter. Family
Dollar Stores Inc. (FDO) also gained ground after posting sales and
profit that were better than Street estimates
(http://www.marketwatch.com/story/family-dollar-sales-profit-match-expectations-2015-04-08).
Other markets: Gold prices (GCM5) inched lower, while the dollar
(DXY) shifted lower against the yen specifically after the Bank of
Japan held its policy steady
(http://www.marketwatch.com/story/bank-of-japan-maintains-monetary-easing-policy-2015-04-08).
Asian stocks had a largely positive day, with the Nikkei 225
index closing up 0.8%. European stocks marked a record high, and
London's FTSE 100 index got a boost on the Shell-BG deal news.
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