Stocks eke out gains as Fed keeps hikes on table
U.S. stocks were eked out gains Wednesday as the latest Federal Reserve meeting minutes suggest an interest-rate hike is still on the table this year.
The Dow Jones industrial average edged up 0.1%, or 23 points to 18,573.94, while the Standard & Poor's 500 index ended up 0.2% to 2182.22. The Nasdaq composite was barely positive, up less than 0.1% to 5228.66.
The major indexes had been trading slightly lower for most of the day before cutting their losses as the Fed news went out at 2 p.m. ET, two hours before the close.
"The market is moving a bit off of these Fed minutes, but it's not moving in a meaningful way," said Bill Merz, investment strategist at U.S. Bank Wealth Management, in an interview.
U.S. markets had hit record highs Monday amid what has turned out to be an ebullient mood so far this month.
Fed policymakers left rates unchanged in June but kept the door open for a possible September rate hike, though it's more likely in December. The Fed said in its statement after the meeting that "near-term risks to the economic outlook diminished.”
"They (members of Fed) judged that another increase in the federal funds rate was or would soon be warranted," according to the notes.
Merz said that investors had been expecting a slightly more optimistic tone from the Fed, but that market sentiment hasn't shifted sharply because of the report.
"I think the general market consensus is that we are in a lower-for-longer environment," he said.
Economic reports released since the Fed meeting have shown that employers added a robust 255,000 jobs in July and a revised upward 292,000 in June. But economic growth in the second quarter came in at a disappointing 1.2% in the April-June period.
The Fed has kept its benchmark rate unchanged since raising it in December — to a still meager 0.4% — for the first time in nine years.
Though investors might be pleased at the prospect of low interest rates for a longer period, some sectors are hurting. On Wednesday, the retail sector suffered another round of blows Wednesday as home improvement retailer Lowe's posted disappointing earnings and big-box chain Target lowered its outlook, bludgeoning stocks of both companies.
The S&P Retail Select Industry Index, which tracks a basket of retailers including Gap, Finish Line and Dick's Sporting Goods, fell 1.2% in afternoon trading Wednesday.
But utility stocks outperformed the market. The Dow Jones U.S. Utilities Index rose 1.2%.
Contributing: Matt Krantz.
Follow Paste BN reporter Nathan Bomey on Twitter @NathanBomey.