The stock market closed higher Wednesday after the Fed released minutes of its last meeting. The minutes showed, as expected, the Fed was concerned that “inflation pressures had yet to show signs of abating.” Technology stocks gained, led by Google-parent Alphabet (GOOGL), Microsoft (MSFT) and Intel (INTC).
The Nasdaq rose 0.4%. The S&P 500 closed up 0.4%, and the Dow Jones Industrial Average gained 0.2%.
Volume was lower on both the Nasdaq and the New York Stock Exchange as compared to the same time on Tuesday. The small-cap Russell 2000 closed 0.8% lower. The Innovator IBD 50 (FFTY), a bellwether for growth stocks, was flat.
The 10-year U.S. Treasury note yields climbed 12 basis points to 2.93%, breaking a slide since mid-June when it hit its highest level since April 2011, at 3.48%.
Fed Minutes Boost Stock Market
U.S. Stock Market Today Overview
|Last Update: 4:30 PM ET 7/6/2022|
The Federal Reserve, led by Chairman Jerome Powell, decided to make a larger than expected interest rate hike last month as the inflation outlook had deteriorated, the newly released minutes from the meeting showed.
The central bank ultimately decided to raise the benchmark rate by 0.75% despite previously taking such a large hike off the table.
“The near-term inflation outlook had deteriorated since the time of the May meeting,” the minutes said. “Participants were concerned that the May CPI release indicated that inflation pressures had yet to show signs of abating, and a number of them saw it as solidifying the view that inflation would be more persistent than they had previously anticipated.”
Fed members also decided that an “increase of 50 or 75 basis points would likely be appropriate at the next meeting.” In addition, they thought an “even more restrictive stance” could be appropriate if inflation pressures persist.
“Markets have received the message loud and clear,” said Quincy Krosby, Chief Equity Strategist for LPL Financial. “Since the last meeting, economic conditions have weakened as financial conditions have tightened. What markets want to hear now, is what the Fed has in mind if economic data releases continue to signal a deeper more serious downturn without a commensurate easing in inflation.”
Stocks Rise On Fed; Microsoft, Google Reclaim Key Level
Oil Prices Continue To Fall
Krosby added: “The Fed fund futures market is still pricing in a 75 basis point hike at the next Fed meeting July 26-27.”
Meanwhile, U.S. oil prices fell close to 1%, with West Texas Intermediate trading around $98.64 a barrel.
Apple (AAPL), Intel, Cisco (CSCO), Alphabet and Microsoft were among the best blue chip performers. AAPL rose, but is continuing to trade below its 50-day moving average. The relative strength line is showing signs of improvement though.
MSFT managed to retake its 50-day line. Microsoft stock remains down around 20% so far for the year.
Leaderboard stock UnitedHealth (UNH) popped more than 2%. UNH is back above a double-bottom entry as it holds support at the 50-day moving average.
Aerospace stocks continued to gain since the U.S. Department of Defense announced on July 1 another $820 million round of U.S. security assistance. Contracts for that support go out to a number of its major defense industry players, the likes of Raytheon (RTX), Lockheed Martin (LMT) and Northrop Grumman (NOC), helping defense stocks hold their ground against a choppy market. All three stocks advanced Wednesday, especially Northrop, which closed more than 4% higher.
EV Stock Rivian Explodes
Tesla (TSLA) stock was struggling, down 0.3%, despite sunny guidance from EV rival Rivian (RIVN). It remains down more than 40% since the start of the year. TSLA stock remains stuck well below its 50-day moving average. It is near the lows of a consolidation pattern with a 1,208.10 entry.
In contrast, electric vehicle maker Rivian exploded, rising more than 10%. It was given a boost after it said it is on track to deliver 25,000 vehicles in 2022. The firm also reported it produced 4,401 vehicles in its most recent quarter. Although it delivered 4,467, which was in line with internal expectations.
Evolent Health (EVH) is in a buy zone after clearing a new handle entry of 32.55. The stock’s relative strength has spiked to fresh heights, a positive. It is breaking out after it struggled to clear a prior cup-with-handle base. It has been moving higher in strong volume, which is a sign of institutional accumulation.
The bullish move saw the medical software stock added to the the prestigious Leaderboard list of leading stocks.
Follow Michael Molinski on Twitter @IMmolinski
YOU MAY ALSO LIKE:
Time To Tweak Your Investments To An Inflationary Environment?
Get Full Access To IBD Stock Lists And Ratings
Is XOM A Buy Now After Q1 Earnings?
Get Free IBD Newsletters: Market Prep | Tech Report | How To Invest
What Is CAN SLIM? If You Want To Find Winning Stocks, Better Know It
The post Stock Market Closes Higher On Fed Minutes; Microsoft And Cisco Lead Tech Stocks Higher appeared first on Investor’s Business Daily.