U.S. stocks came off session highs Wednesday after the release of the Fed minutes.
The Federal Reserve’s April meeting minutes said a June rate hike was likely if the data improves.
All three major indexes turned lower. The Dow Jones industrial average briefly fell 100 points. The S&P 500 gave up earlier gains, Utilities led declines in the S&P, while Wal-Mart contributed the most to declines in the Dow.
The 2-year Treasury yield spiked above 0.9 percent. The U.S. dollar index extended gains to trade more than half a percent higher to levels not seen since late April, with the euro near $1.123 and the yen near 109.9 yen against the greenback as of 2:36 p.m. ET.
U.S. crude oil futures settled down 12 cents at $48.19 a barrel.
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Ahead of the minutes’ release, the Dow Jones industrial average briefly added 100 points in early afternoon trade, with Goldman Sachs and JPMorgan Chase rising nearly 3 percent or more to contribute the most to gains. Wal-Mart had the greatest negative impact, trading more than 2 percent lower ahead of its earnings due Thursday morning.
“I think what the market is thinking is a possible rate hike in June is back on the table,” said Robert Pavlik, chief market strategist at Boston Private Wealth. “I think some of that focus is going to play out later in the day when the Fed minutes come out. I think people are a little on edge. Then you have some weakness in the retailers.”
U.S. crude oil futures traded higher after the EIA’s weekly inventory data showed a 1.3 million barrel build in crude, while other fuel stockpiles declined.
Bruce Bittles, chief investment strategist at R.W. Baird attributed much of the gains to stocks being “a touch oversold. They’ve been down three weeks in a row. The pessimism has mushroomed a little bit.”
“I think the markets would like to see the economy better because if profits are the problem (we need economic growth),” he said.
The major stock indexes sold off in afternoon trade Tuesday while the rate-sensitive 2-year yield rose as the latest Fed commentary increased market expectations for the Federal Reserve raising rates as soon as its June meeting.
As of morning trade Wednesday, Fed funds futures were showing a 16 percent chance of a June rate hike, versus 4 percent last week, according to RBS.
“If the minutes should suggest the Fed is less concerned about the global economy, the Fed is less concerned about Britain exiting the EU, those two factors would probably be an indication the Fed is leaning towards a rate hike in June,” said Peter Cardillo, chief market economist at First Standard Financial.
In corporate news, Target reported a lower-than-expected 1.2 percent increase in comparable sales, while net revenue declined to $16.2 billion, mainly due to the sale of pharmacy and clinic business to CVS Health. Guidance was below expectations, with Target noting its second-quarter view “has been tempered by the recent slowdown in consumer trends.” The firm said it still believes its prior earnings guidance range “is achievable.”
“They’re basically seeing the same thing as all the department stores are seeing. That’s going to weigh on shares this morning,” said Brian Yarbrough, consumer research analyst at Edward Jones.
Target briefly fell more than 9.5 percent in morning trade.
“There’s a lack of innovation on the electronics side and we’re long in the tooth in athleisure. … We need a new trend that will emerge to drive revenue growth,” Yarbrough said.
In other earnings news, Staples beat slightly on the top and bottom line, but North American same-store sales were down 4 percent, a bigger drop than the 3.1 percent drop analysts had expected. Shares turned lower in midday trade.
Lowe’s reported earnings and revenue above expectations, and the same-store sales increase of 7.3 percent was well above the consensus estimate of a 4.4 percent rise. Shares rose 3.5 percent in midday trade.
Hormel posted earnings a touch above expectations, while revenue was essentially in-line. The food manufacturer also raised its full-year earnings forecast. Shares fell 9 percent in midday trade.
Separately, the New York Stock Exchange said Wednesday it had a technical issue.
Phil Quartuccio, CEO of Illustro Trading, said the issue was “very small” and that traders were awaiting the afternoon’s release of the Fed minutes.
European stocks were more than half a percent higher, with bank stocks outperforming.
Asian stocks closed lower, with the Shanghai composite more than 1 percent lower and the Nikkei 225 a touch lower.
In Japan, real gross domestic product (GDP) for the January-March period expanded an annualized 1.7 percent. On a quarterly basis, GDP grew 0.4 percent, topping a poll forecast for a 0.1 percent rise.
The U.S. dollar index traded mildly higher, with the euro near $1.128 and the yen around 109.6 yen against the greenback in afternoon trade ET.
In afternoon trade, the Dow Jones industrial average rose 29 points, or 0.17 percent, to 17,559, with JPMorgan Chase leading advancers and Wal-Mart the greatest decliner.
Transports briefly traded 0.5 percent higher with Kansas City Southern leading advancers.
The S&P 500 rose 5 points, or 0.25 percent, to 2,052, with financials leading three sectors higher and consumer staples the greatest laggard.
The Nasdaq composite gained 27 points, or 0.57 percent, to 4,742.
The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, edged lower to 15.3.
U.S. crude oil futures for June delivery rose 47 cents to $48.78 a barrel on the New York Mercantile Exchange.
Gold futures for June delivery fell $3.40 to $1,273.50 an ounce as of 12:53 p.m. ET.
—CNBC’s Peter Schacknow contributed to this report.
On tap this week:
Earnings: Cisco Systems, L Brands, Salesforce.com
2 p.m. FOMC minutes
Earnings: Wal-Mart, Gap, Applied Materials, Dick’s Sporting Goods, Autodesk, Advanced Auto Parts, Ross Stores, Shoe Carnival, Mentor Graphics, Brocade
8:30 a.m. Jobless claims; Philadelphia Fed survey
10:30 a.m. New York Fed President William Dudley press briefing
Earnings: Campbell Soup, Deere, Foot Locker, The Buckle
10 a.m. Existing home sales
*Planner subject to change.
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