Benchmarks ended higher on Wednesday boosted primarily by the
encouraging minutes from the FOMC meeting. Fed officials discussed
monetary tightening while remaining flexible on such a measure.
They also discussed approaches to hiking rates, but clarified this
was not an indication that rates would be hiked immediately.
Meanwhile, gains from consumer discretionary and energy stocks also
helped benchmarks finish in the green. These positives helped the
Dow post its largest daily percentage jump in a month.
For a look at the issues currently facing the markets, make sure to
Ahead of Wall Street
The Dow Jones Industrial Average (DJI) gained almost 1.0% to close
Wednesday's trading session at 16,533.06. The Standard & Poor
500 (S&P 500) went up 0.8% to finish at 1,888.03. The
tech-laden Nasdaq Composite Index rose 0.9% to 4,131.54. The
fear-gauge CBOE Volatility Index (VIX) plunged 8.1% to settle at
11.91. Total volume on the New York Stock Exchange was 2.7 billion
shares. Advancers outpaced declining stocks on the NYSE. For 63%
stocks that advanced, 34% declined.
Benchmarks were positively impacted after minutes from the Federal
Open Market Committee's (FOMC) April
meeting indicated that the central
bank decided to remain flexible
when it comes to raising short
term interest rates. Federal Reserve officials in its
April 29-30 meeting discussed "several approaches" to tighten
monetary policy but made no decisions on which tools to apply.
The minutes also stated that according to a number of Federal
Reserve officials it is essential for the
Fed to "communicate still more
clearly about the Fed's policy intentions
as the time of the first increase in the federal funds rate moves
Many Federal Reserve officials opined that the inflation rate was
stabilizing and will gradually reach the central bank's target of
2%. Only few officials were anxious about the risk of low
Earlier in May, Federal Reserve Chairwoman Janet Yellen in a
testimony before the Senate Budget Committee had mentioned the
central bank's intentions to keep interest rates low. Yellen
commented: "Interest rates are unlikely to begin rising until we
are in a strong economic recovery".
In her testimony before the Joint Economic Committee, Yellen also
stated that the central bank intends to keep federal funds rate low
for some time, even after employment and inflation rates return to
the desired level.
Coming back to yesterday's events, gains in the consumer
discretionary sector also had a positive impact on benchmarks.
Tiffany & Co. (NYSE:
) led the advance after its shares surged 9.2% on upbeat quarterly
results. The luxury-jewelry maker reported first-quarter fiscal
2014 earnings of 97 cents per share, significantly more than the
Zacks Consensus Estimate of 77 cents per share and prior year
quarter's adjusted earnings of 70 cents. The company also posted
net sales of $1,012.1 million during the quarter, up 13% from the
prior-year quarter. Total revenue was also more than the Zacks
Consensus Estimate of $953 million.
Variety store retailer Target Corp.'s (NYSE:
) shares also increased 1.0% after the retailer's first-quarter
fiscal 2014 adjusted earnings of 70 cents a share came in line with
the Zacks Consensus Estimate. The company's total revenue increased
2.1% year on year to $17,050 million, ahead of the Zacks Consensus
Estimate of $17,010 million.
Internet stocks from the consumer discretionary sector such as
online retailer Amazon.com Inc. (NASDAQ:
), Internet television network provider Netflix, Inc. (NASDAQ:
), online travel company TripAdvisor Inc. (NASDAQ:
) and The Priceline Group Inc. (NASDAQ:
) increased 1.3%, 5.1%, 2.7% and 2.4%, respectively.
Other key stocks from the sector such as Comcast Corporation
), The Walt Disney Company (NYSE:
), The Home Depot, Inc. (NYSE:
), McDonald's Corp. (NYSE:
) and Ford Motor Co. (NYSE:
) gained 1.4%, 1.4%, 0.2%, 1.0% and 0.9%, respectively. The
Consumer Discretionary Select Sector SPDR (XLY) advanced 1.2%, the
highest among the S&P 500 sectors. Overall, all the 10 sectors
of the S&P 500 ended in the green.
Additionally, gains made by energy stocks ensured a positive finish
for the benchmarks. The Energy Select Sector SPDR (XLE) increased
1.1%. Top holdings from the sector such as Exxon Mobil Corporation
), Chevron Corporation (NYSE:
), ConocoPhillips (NYSE:
), Occidental Petroleum Corporation (NYSE:
) and EOG Resources, Inc. (NYSE:
) increased 1.4%, 1.4%, 0.9%, 2.2% and 2.2%, respectively.
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