By Wallace Witkowski and William Watts, MarketWatch
Alcoa earnings on tap after the closing bell
SAN FRANCISCO (MarketWatch) --U.S. stocks took a volatile tumble
only to recover quickly after meeting minutes from March showed
several Federal Reserve officials were in favor of a June rate
hike.
The S&P 500 (SPX) rose 3 points, or 0.2%, to 2,079,
following a brief dip into negative territory following the
minutes. The Dow Jones Industrial Average (DJI), which took a
deeper swing into the red, was up 7 points to 17,882 The Nasdaq
Composite Index (RIXF), which had stayed in positive territory, was
up about 30 points, or 0.6%, to 4,940.
Stocks weakened soon after the minutes were released. While
several members appeared to support a June rate hike
(http://www.marketwatch.com/story/several-on-fed-favored-june-rate-increase-minutes-2015-04-08)back
in mid-March, the meeting minutes doesn't reflect a spate of
economic reports, including last Friday's jobs data, signaling
softness in the U.S. economy.
Ahead of the release of the 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 economic weakness.
Also, 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.
At least some Wall Street investors believe the Fed's minutes
don't reflect the current state of the market. "To some degree, the
importance of these FOMC minutes has been somewhat diminished,"
wrote Dan Greenhaus, chief strategist at BTIG in a research note
following the release of minutes.
"After all, the less-than-stellar monthly payroll report was
released afterwards. Whatever level of hawkishness may have been in
place in March such that the FOMC thought it appropriate to drop
"patient" is, however modestly, less so today," Greenhaus
added.
Wednesday's other big story was oil, which tanked after 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. The increase comes as the market has been
fretting about a global oil glut.
The oil inventory news and Fed minutes come as investors await
the unofficial start to corporate-earnings season with Alcoa set to
report after Wednesday's close.
Trading in the S&P 500 got a boost from Mylan N.V. (MYL),
which jumped 16% 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 20% 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
telecom and energy were lower.
Visa Inc. (V) and Nike Inc. (NKE) were leading gainers among the
Dow industrial components.
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 (BRGYY) 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 about 4%, but shares of BP PLC
(BP) rose 0.5% as the deal was expected to trigger more
consolidation speculation in the industry. BG shares jumped
26%.
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)
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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