Markets Boosted by Fed’s Interest Rate Stance
Markets responded positively Wednesday to minutes of the Federal Reserve’s recent policy meeting which revealed that the central bank aims to keep interest rates low. This came as somewhat of a surprise to many investors and served to boost fragile investor sentiment. All three of Wall Street’s major stock indexes closed the day up more than 1 percent, with eight of the ten Standard & Poor’s 500 stock index sectors closing higher. The S&P 500 rose 20.22 points (1.1 percent) to close at 1,872.18, while the Dow Jones industrial average climbed 181.04 points (1.1 percent) to close at 16,437.18. The Nasdaq composite index increased by 70.91 points (1.7 percent) to close at 4,183.90. The day’s biggest increases were among biotechnology and internet stocks.
Ranked as one of the S&P 500’s top performers with first quarter earnings exceeding expectations, aluminum producer Alcoa climbed 47 cents (3.8 percent) to $13 per share. With a projected growth of only one percent from last year, first quarter overall earnings for S&P 500 companies are down from the estimated profit growth of 6.5 percent at the beginning of the year. With investors buying up embattled social media and internet shares, stocks advanced in the previous session, thereby breaking a losing streak of three days.
Wednesday saw the Nasdaq biotechnology index climb 4.1 percent, closing at 2,455.83, while the Global X Social Media Index ETF closed at 19.11, reflecting a gain of 3.3 percent. The Global X Social Media Index ETF includes worldwide publicly traded companies that provide file sharing, social networking and other digital media applications.
Data from the Commerce Department noted that growth in wholesale inventories slowed to 0.5 percent for February, following January’s 0.8 percent gain. This was in line with expectations, supporting the view of economists that restocking inventories failed to help the economy in 2014’s first quarter.