U.S. stocks closed slightly higher on Wednesday in volatile trading following the release of Federal Reserve’s meeting minutes where several officials from the US central bank had favored a June rate hike.
The S&P 500 SPX, +0.27% closed up 5.57 points, or 0.3%, to 2,081.90, after being down as many as 3 points earlier in the day. The Dow Jones Industrial Average DJIA, +0.15% which had been up as many as 100 points before the minutes and down as many as 53 points after the minutes, finished up 27.09 points, or 0.2%, at 17,902.51.
The Nasdaq Composite Index COMP, +0.83% which remained in positive territory for the session, closed up 40.59 points, or 0.8%, to 4,950.82.
While several Fed members appeared to support a June rate hike back in mid-March, the meeting minutes don’t reflect a spate of economic reports, including last Friday’s jobs data, signaling softness in the U.S. economy.
“Whatever level of hawkishness may have been in place in March such that the FOMC thought it appropriate to drop ‘patient’ is, however modestly, less so today,” said Dan Greenhaus, chief strategist at BTIG, in emailed comments.
What’s just as important is how divided Fed members seem, Greenhaus said, given the balanced dovish and hawkish tones of the minutes. What’s particularly interesting, Greenhaus points out, is language on holding the federal funds rate below its normal run level because “the headwinds that have been holding back the recovery will continue to exert some restraint on economic activity.”
Ahead of the release of the minutes, New York Fed President William Dudley suggested that the bar for raising rates in June is high, given recent signs of economic weakness.
Also, Federal Reserve Gov. Jerome Powell, in a speech, said he expects economic conditions to support a rate hike later this year. Powell also said he wasn’t troubled by equity valuations and that the Fed was unlikely to put “its toe in the water” and declare overly high stock prices to be a justification for a rate hike.
Wednesday’s other big story was oil, which tanked after the Energy Information Administration reported that domestic-crude inventories rose a higher-than-expected 10.9 million barrels to 482.4 million. The increase comes as the market has been fretting about a global oil glut.
Trading in the S&P 500 got a boost from Mylan N.V. MYL, +0.20% which jumped 15% on the heels of news that it was proposing to acquire Dublin-based pharmaceutical company Perrigo Co. PLC PRGO, +0.23% for $205 a share. Perrigo’s shares closed up 18% on the news.
Seven of the 10 sectors of the S&P 500 closed higher, led by health care and consumer discretionary. Telecom and energy were the biggest laggards.
Nike Inc. NKE, +0.07% and Home Depot Inc. HD, +0.06% led gainers among the Dow industrial components.
Energy shares were in focus on Wednesday as oil prices CLK5, +1.88% swooned after the EIA’s report indicated that domestic crude oil inventories have reached their highest level for this time of the year in 80 years. Crude-oil futures were already under pressure earlier in the session on news that Saudi Arabia had raised its output to record levels.
In a sign of how lower oil prices are shaking up the industry, Royal Dutch Shell Group PLC RDS.A, -3.42% RDS.B, -6.13% RDSA, +0.34% RDSB, -0.13% said it would buy BG Group BG., +0.00% BRGYY, +27.50% in a deal worth nearly $70 billion. U.S.-listed shares of Shell fell nearly 4%, but shares of BP PLC BP, +1.29% rose 0.5% as the deal was expected to trigger more consolidation speculation in the industry. BG shares jumped 27%.
Stocks to watch: Outside of oil stocks, Alcoa Inc. AA, +1.79% fell under pressure after hours on quarterly revenue that fell short of Wall Street estimates. Bed Bath & Beyond Inc. BBBY, +1.28% also declined on sales and outlook misses.
Shares of Apple Inc. AAPL, -0.33% closed down 0.3% after a downgrade by Société Générale.
Rite Aid Corp. RAD, +2.07% shares rose. The company posted better-than-expected profit for its fiscal fourth quarter. Family Dollar Stores Inc. FDO, +1.06% also gained ground after posting sales and profit that were better than Street estimates.
Other markets: Gold prices GCM5, -0.59% settled lower, while the dollar DXY, +0.34% shifted lower against the yen specifically after the Bank of Japan held its policy steady.
Asian stocks ADOW, +1.05% had a largely positive day, with the Nikkei 225 index NIK, +0.75% closing up 0.8%. European stocks SXXP, +0.39% marked a record high, and London’s FTSE 100 index UKX, +0.54% got a boost on the Shell-BG deal news.