Stocks moved higher Thursday after minutes from the Federal Reserve’s latest meeting suggested policymakers were surprisingly unified in their vote against raising interest rates. The market is continuing a weeklong advance.
KEEPING SCORE: The Dow Jones industrial average was up 138 points, or 0.8 percent, to 17,050 as of 3:10 p.m. Eastern. The Standard & Poor’s 500 index rose five points, or 0.3 percent, to 2,001 and the Nasdaq composite rose 20 points, or 0.4 percent, to 4,812.
FED WATCH: In the minutes from their September meeting, Fed officials expressed worries about an economic slowdown in China and its potential to impede U.S. growth and keep inflation persistently low. But the discussions showed the central bank believed the time for the first Fed rate increase in nine years “might be near.”
Policymakers decided, however, that it would be “prudent to wait” for evidence that the economy had not deteriorated and that inflation would gradually move back toward the Fed’s 2 percent annual target. Some members also expressed concerns that a premature rate hike could harm the central bank’s credibility.
The minutes seemed to reflect what had been the general talk among traders and investors the last few weeks: that the Fed is not looking to raise interest rates quickly and it could be some time before the first increase happens.
The Fed has repeatedly signaled it wants to raise interest rates, but it has held off on doing so, leaving its benchmark rate near zero. Scott Clemons, chief investment strategist for Brown Brothers Harriman’s wealth management business, said investors no longer expect rates to go up this year, even though Chair Janet Yellen has said that’s likely to happen.
He added that the central bank is “beginning to falter” in communicating its plans. “The market has begun to conclude that they’re the boy who cried wolf” where raising interest rates are concerned, Clemons said.
STOP-PRO: Camera maker GoPro sank $1.73, or 6 percent, to $27.60, after Morgan Stanley drastically cut its price target on the company, citing weak demand for GoPro’s most recent products. GoPro’s stock has been in free-fall for weeks and it’s coming close to dipping below its initial public offering price of two years ago.
DEAL WATCH: Cloud computing and data storage company EMC added $1.15, or 4 percent, to $27.11 after The Wall Street Journal reported that Dell, the PC maker, and a private equity firm are in advance talks to buy it.
WRITEDOWNS: Deutsche Bank fell 52 cents, or 2 percent, to $28.27 after the bank said it would take $6.5 billion in writedowns for its corporate and investment banking divisions.
ENERGY: Benchmark U.S. crude rose $1.62 to close to $49.43 a barrel on the New York Mercantile Exchange. Brent Crude, which is used to price international oils, climbed $1.72 to $53.05 a barrel in London.
BONDS, CURRENCIES: Investors sold bonds, pushing yields higher. The yield on the 10-year Treasury note rose to 2.11 percent from 2.07 percent late Wednesday. The euro rose to $1.1272 while the dollar was little changed at 120 yen.
METALS: Precious and industrial metals futures ended lower. Gold lost $4.40 to $1,144.30 an ounce, silver fell 33 cents to $15.77 an ounce and copper declined two cents to $2.34 a pound.
(AP)
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One Response
In simple terms, the stock market reflects the whims and manipulations of the Federal Reserve Board, and really doesn’t reflect the health of the economy or the profitability of the companies listed.