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Stocks Rebound Intraday Following FOMC Minutes
23-May-18 16:30 ET
Dow +52.40 at 24886.81, Nasdaq +47.50 at 7425.96, S&P +8.85 at 2733.29

https://www.briefing.com/investor/markets/stock-market-update/2018/5/23/stocks-rebound-intraday-following-fomc-minutes.htm

[BRIEFING.COM] The stock market earned a hard-fought victory on Wednesday, boosted by the afternoon release of the FOMC minutes from the May meeting, which came in more dovish than expected, helping the market overcome a lower start to the session. The Dow Jones Industrial Average climbed 0.2%, the S&P 500 advanced 0.3%, and the tech-heavy Nasdaq Composite jumped 0.6%. Small caps also ended the day higher, with the Russell 2000 adding 0.2%.

Lingering concerns about U.S.-China trade relations and doubts that the U.S.-North Korea summit will take place as scheduled weighed on the equity market at the start of Wednesday's session. The major stock indices opened with losses of around 0.4% apiece and stayed at, or near, that level all the way into the afternoon.

However, things turned around following the release of the FOMC minutes from the May meeting, which pointed to a rate hike in June, as expected, and suggested that the Fed may not be as aggressive with its rate hikes as many had previously thought. The latter takeaway stems from the acknowledgement in the minutes that officials would be content to let inflation briefly run above their 2.0% target.

Stocks shot higher following the minutes release, while the 'Fed-sensitive' 2-yr Treasury yield dropped sharply. The 2-yr yield was hovering around 2.58% ahead of the minutes, but eventually finished three basis points below its Tuesday close at 2.53%. Meanwhile, the benchmark 10-yr yield lost six basis points on Wednesday, dropping to 3.00%, amid fears of a populist government in Italy, whose agenda will surely drive up budget deficits. The Italian populist fears also weighed on the euro, helping to push the U.S. Dollar Index up 0.4% to 93.88, a fresh five-month high.

Back to yields, the narrowing gap between the 2-yr yield and the 10-yr yield weighed on financials, which rely on the difference between what they pay for deposits and what they receive for loans. The financial sector was the worst-performing S&P group on Wednesday, losing 0.6%. Telecom services also struggled, dropping 0.4%, but no other sector lost more than 0.2%, and most finished in the green.

Information technology finished alongside utilities at the top of the sector standings, adding 0.9%, with Netflix (NFLX 344.72, +13.10) leading the charge. Netflix shares rallied 4.0%, closing at a new record high. Meanwhile, tech giants Apple (AAPL 188.36, +1.20), Microsoft (MSFT 98.66, +1.16), Facebook (FB 186.90, +3.10), and Alphabet (GOOG 1079.69, +9.96) added between 0.6% and 1.7%. Chipmakers outperformed slightly, pushing the PHLX Semiconductor Index higher by 0.5%.

The consumer discretionary space was also a notable outperformer, adding 0.8%. Home improvement retailer Lowe's (LOW 94.69, +8.94) led the sector higher after news that Bill Ackman's Pershing Square has taken a $1 billion stake in the company -- which outweighed Lowe's below-consensus first quarter results. Lowe's shares rallied 10.4%, closing at a three-month high.

Meanwhile, shares of Tiffany & Co (TIF 126.05, +23.81) spiked 23.3%, hitting a new all-time high, after the luxury jewelry retailer beat quarterly earnings and revenue estimates, raised its guidance, and authorized a new share repurchase program. Shares of Target (TGT 71.17, -4.30), however, dropped 5.7% after the company missed on the bottom line.

Reviewing Wednesday's economic data, which included April New Home Sales and the weekly MBA Mortgage Applications Index:

New Home Sales in April hit an annualized rate of 662,000, below the Briefing.com consensus of 677,000. The March reading was revised to 672,000 (from 694,000).
The key takeaway from the report is that lower-priced homes ($399,999 or less) accounted for a smaller percentage of new homes sold in April than the prior month, reflecting perhaps the lack of supply at more attractive price points for prospective buyers.
The weekly MBA Mortgage Applications Index decreased 2.6% following last week's decline of 2.7%.

Looking ahead, investors will receive weekly Initial Claims, the FHFA Housing Price Index for March, and Existing Home Sales for April on Thursday.

Nasdaq Composite +7.6% YTD
Russell 2000 +6.0% YTD
S&P 500 +2.2% YTD
Dow Jones Industrial Average +0.7% YTD