U.S. stocks jumped on Wednesday# Stock
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U.S. stocks jumped on Wednesday, extending gains into a second session,
after minutes from the Federal Reserve's last session offset concern about
when the central bank would raise interest rates.
The Federal Open Market Committee's minutes had policy makers unanimous in
agreeing to drop an unemployment target for hiking rates.
The decision "makes a lot of sense, to have a fixed data point when you're
talking about the unemployment rate doesn't consider all the factors," said
Dave Roda, regional chief investment officer at Wells Fargo Private Bank.
Treasury yields jumped last month after Fed members forecast the benchmark
interest rate would climb more rapidly than previously projected. And Fed
Chair Janet Yellen said rates could begin to climb about six months after
the central bank concludes its monthly bond purchases.
"In the end they confirmed that it's data dependent, as long as the pace of
improvement in the economy remains at current levels, we should expect
reductions in bond purchases and we should expect rates to stay at current
levels for the foreseeable future, so some of that uncertainty was
alleviated," Roda added.
"All the Fed knows right now is they are going to taper unless something
massive happens in a negative way. This is a very accommodative Fed; Taper
was accommodative plus, plus, now it's accommodative plus. We're not even
near the territory of actual tightening," said Zachary Karabell, head of
global strategy at Envestnet.
A day after bouncing back from a selloff, Facebook rallied, as did LinkedIn,
Priceline Group. Amazon.com and Tesla Motors.
"You're seeing strength in some of the higher-growth stocks. I think that's
giving people some confidence to wade back into the market," said Doug
Foreman, chief investment officer at Kayne Anderson Rudnick.
"For a lot of people, that's been a source of concern, that it might be a
prelude to a major correction, or that short-term investors were jumping on
a trend that could quickly reverse," said Foreman of the three-session hit
taken by biotech and new-tech shares.
After falling below its offering price in its first day of trading,
midmarket hotel chain La Quinta reversed higher; the Blackstone-backed
company raised $650 million from an offering of 38.25 million shares.
Name Price Change %Change
DJIA Dow Jones Industrial Average 16410.49
154.35 0.95%
S&P 500 S&P 500 Index 1869.27
17.31 0.93%
NASDAQ Nasdaq Composite Index 4176.17
63.19 1.54%
The Dow Jones Industrial Average advanced 162.64 points, or 1 percent, to 16
,418.78, with Merck & Co. pacing blue-chip gains that included 26 of 30
components.
The S&P 500 climbed 17.24 points, or 0.9 percent, to 1,869.20, with health
care, materials and technology pacing gains that included all but
telecommunications and utilities among its 10 major industry groups.
The market is oversold, at least in the short term, helping support prices,
said Art Hogan, chief market strategist at Wunderlich Securities.
"The S&P 500 seems to be holding above the psychologically important 1,850
level," he added.
The Nasdaq added 62.42 points, or 1.5 percent, to 4,175.41.
For every stock falling, more than two rose on the New York Stock Exchange,
where 449 million shares traded as of 3:15 p.m. Eastern. Composite volume
cleared 2.5 billion.
The U.S. dollar edged lower, while the cost of crude rose, with futures for
May delivery up $1.04 to $103.60 a barrel. Gold futures for June delivery
shed $3.20 to $1,305.50 an ounce.
Play Video
The biotech parade
CNBC's Meg Tirrell provides insight on the increase in biotech IPOs, and
what to expect from both Cerulean Pharma & Adamas Pharmaceuticals ahead of
their IPO pricing Wednesday night.
The 10-year Treasury yield used in figuring mortgage rates and other
consumer loans climbed 1 basis point to 2.689 percent.
U.S. equities are rangebound and tied to 10-year and 30-year Treasury yields
, believes said Nick Raich, chief executive officer at the Earnings Scout.
"It's all about the level of interest rates and expectations, when yields
drop, that paves the way for continued positive improvement in earnings
expectations," Raich said. When the 30-year Treasury bond hits 4.75 percent
and the 10-year Treasury rises to 3 percent, "economic expectations roll
over," along with stocks, he added.
The Commerce Department on Wednesday reported wholesale inventories rose 0.5
percent in February after a revised 0.8 percent the prior month, in line
with expectations.
Shares of Alcoa gained after the aluminum producer projected demand for the
metal would top output this year.
"So far, 24 companies have reported, counting Alcoa, on the first-quarter
earnings clock, and the guidance is not as severe" as the prior quarter,
said Raich.
On Tuesday, stocks rose, with the Nasdaq Composite bouncing back from its
worst three-day hit since 2011.
after minutes from the Federal Reserve's last session offset concern about
when the central bank would raise interest rates.
The Federal Open Market Committee's minutes had policy makers unanimous in
agreeing to drop an unemployment target for hiking rates.
The decision "makes a lot of sense, to have a fixed data point when you're
talking about the unemployment rate doesn't consider all the factors," said
Dave Roda, regional chief investment officer at Wells Fargo Private Bank.
Treasury yields jumped last month after Fed members forecast the benchmark
interest rate would climb more rapidly than previously projected. And Fed
Chair Janet Yellen said rates could begin to climb about six months after
the central bank concludes its monthly bond purchases.
"In the end they confirmed that it's data dependent, as long as the pace of
improvement in the economy remains at current levels, we should expect
reductions in bond purchases and we should expect rates to stay at current
levels for the foreseeable future, so some of that uncertainty was
alleviated," Roda added.
"All the Fed knows right now is they are going to taper unless something
massive happens in a negative way. This is a very accommodative Fed; Taper
was accommodative plus, plus, now it's accommodative plus. We're not even
near the territory of actual tightening," said Zachary Karabell, head of
global strategy at Envestnet.
A day after bouncing back from a selloff, Facebook rallied, as did LinkedIn,
Priceline Group. Amazon.com and Tesla Motors.
"You're seeing strength in some of the higher-growth stocks. I think that's
giving people some confidence to wade back into the market," said Doug
Foreman, chief investment officer at Kayne Anderson Rudnick.
"For a lot of people, that's been a source of concern, that it might be a
prelude to a major correction, or that short-term investors were jumping on
a trend that could quickly reverse," said Foreman of the three-session hit
taken by biotech and new-tech shares.
After falling below its offering price in its first day of trading,
midmarket hotel chain La Quinta reversed higher; the Blackstone-backed
company raised $650 million from an offering of 38.25 million shares.
Name Price Change %Change
DJIA Dow Jones Industrial Average 16410.49
154.35 0.95%
S&P 500 S&P 500 Index 1869.27
17.31 0.93%
NASDAQ Nasdaq Composite Index 4176.17
63.19 1.54%
The Dow Jones Industrial Average advanced 162.64 points, or 1 percent, to 16
,418.78, with Merck & Co. pacing blue-chip gains that included 26 of 30
components.
The S&P 500 climbed 17.24 points, or 0.9 percent, to 1,869.20, with health
care, materials and technology pacing gains that included all but
telecommunications and utilities among its 10 major industry groups.
The market is oversold, at least in the short term, helping support prices,
said Art Hogan, chief market strategist at Wunderlich Securities.
"The S&P 500 seems to be holding above the psychologically important 1,850
level," he added.
The Nasdaq added 62.42 points, or 1.5 percent, to 4,175.41.
For every stock falling, more than two rose on the New York Stock Exchange,
where 449 million shares traded as of 3:15 p.m. Eastern. Composite volume
cleared 2.5 billion.
The U.S. dollar edged lower, while the cost of crude rose, with futures for
May delivery up $1.04 to $103.60 a barrel. Gold futures for June delivery
shed $3.20 to $1,305.50 an ounce.
Play Video
The biotech parade
CNBC's Meg Tirrell provides insight on the increase in biotech IPOs, and
what to expect from both Cerulean Pharma & Adamas Pharmaceuticals ahead of
their IPO pricing Wednesday night.
The 10-year Treasury yield used in figuring mortgage rates and other
consumer loans climbed 1 basis point to 2.689 percent.
U.S. equities are rangebound and tied to 10-year and 30-year Treasury yields
, believes said Nick Raich, chief executive officer at the Earnings Scout.
"It's all about the level of interest rates and expectations, when yields
drop, that paves the way for continued positive improvement in earnings
expectations," Raich said. When the 30-year Treasury bond hits 4.75 percent
and the 10-year Treasury rises to 3 percent, "economic expectations roll
over," along with stocks, he added.
The Commerce Department on Wednesday reported wholesale inventories rose 0.5
percent in February after a revised 0.8 percent the prior month, in line
with expectations.
Shares of Alcoa gained after the aluminum producer projected demand for the
metal would top output this year.
"So far, 24 companies have reported, counting Alcoa, on the first-quarter
earnings clock, and the guidance is not as severe" as the prior quarter,
said Raich.
On Tuesday, stocks rose, with the Nasdaq Composite bouncing back from its
worst three-day hit since 2011.