Stocks mostly higher with financials leading

U.S. stocks traded higher Wednesday, with financials and tech leading, as investors awaited the afternoon release of the Fed minutes.

The Nasdaq composite turned higher in morning trade, helped by a 1 percent gain in shares of Apple. The iShares Nasdaq Biotechnology ETF (IBB) traded more than half a percent higher.

Financials led S&P 500 advancers, with the Bank (KBE) and Regional Banking (KRE) ETFs both trading more than 2.5 percent higher as of 10:36 a.m. ET. Transports traded 1 percent higher.

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.

Treasury yields rose, with the 2-year yield touching 0.86 percent, its highest since April 27. The Fed’s April meeting minutes are due at 2 p.m. ET.

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.

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“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 fell more than 9.5 percent in morning trade. The SPDR S&P Retail ETF (XRT) traded more than 1 percent lower.

Ahead of earnings due Thursday morning, Wal-Mart traded more than 3 percent lower for the greatest negative impact on the Dow Jones industrial average. Goldman Sachs and JPMorgan Chase contributed the most to gains in the index.

“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.

U.S. crude oil futures struggled for gains after the EIA’s weekly inventory data showed a 1.3 million barrel build.

The New York Stock Exchange said Wednesday it had a technical issue.

Symbol
Name
Price
Change
%Change
DJIA Dow Jones Industrial Average 17540.29
10.31 0.06%
S&P 500 S&P 500 Index 2049.81
2.60 0.13%
NASDAQ Nasdaq Composite Index 4739.42
23.68 0.50%

European stocks were lower in morning trade ET. 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.

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In morning trade, the Dow Jones industrial average declined 75 points, or 0.43 percent, to 17,451, with Wal-Mart leading decliners and Applethe top advancer.

The S&P 500 fell 7 points, or 0.34 percent, to 2,040, with consumer staples leading eight sectors lower and financials and information technology the only gainers.

The Nasdaq composite traded down 5 points, or 0.10 percent, to 4,711.

The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded near higher near 15.7.

U.S. crude oil futures for June delivery declined 3 cents to $48.28 a barrel on the New York Mercantile Exchange.

Gold futures for June delivery fell $6.70 to $1,270.20 an ounce as of 9:37 a.m. ET.

On tap this week:

Wednesday

Earnings: Cisco Systems, L Brands, Salesforce.com

2 p.m. FOMC minutes

Thursday

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

Friday

Earnings: Campbell Soup, Deere, Foot Locker, The Buckle

10 a.m. Existing home sales

*Planner subject to change.

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