- S&P 500 ended higher around 0.4% to close around 2,888.
- Dow Jones Industrial Average added 9 basis points, or less than 0.1%, to close near 26,159.
- The Nasdaq Composite added 0.7% to close around 7,964.
Wall Street was mixed on Wednesday while investors were bracing for the FOMC minutes, (following a dovish ECB, on alert to ease if necessary), which came out benign for the greenback and stocks. As far as the benchmarks go, the S&P 500 ended higher around 0.4% to close around 2,888 while the Dow Jones Industrial Average added 9 basis points, or less than 0.1%, to close near 26,159. The Nasdaq Composite added 0.7% to close around 7,964. As for data, March’s consumer prices came in at an expected 0.4% increase. Then, February industrial production for Europe came in better than expected, with French IP up 0.4% m/m and Italian IP up 0.8% m/m.
As far as the FOM minutes go …
Keynotes from today’s FOMC minutes (20 March meeting):
- Majority saw rates on hold through 2019;
- Several officials noted that rate views could shift either way;
- Majority of policymakers said patience needed;
- Several officials concerned yield curve quite flat;
- Fed noted significant uncertainties around the outlook;
- Uncertainty remained high over Brexit and trade but that risks of adverse outlook had fallen;
- Some said economy could rebound and warrant a rate hike late in the year;
- No officials said expected that a rate cut would be needed this year;
- Time would be needed to assess whether Q1 weakness would spill into Q2;
- Saw less of a boost from fiscal policy than expected;
- Most likely outcome was a sustained expansion.
ECB outcome
Analysts at ANZ Bank explained the outcome:
“Draghi was undoubtedly dovish in the press conference, where he acknowledged downside risks to growth and the ECB’s readiness to use available policy tools to address the growth slump. Both growth and inflation risks are to the downside; inflation expectations are weak; and bank lending growth has weakened. Draghi stated the ECB will consider if it needs to mitigate the impact of negative rates on bank intermediation, which may enable the ECB to keep rates lower for longer and open up the zero lower bound. If the ECB softened the profitability headwind of negative rates, banks may be more prepared to take up cheap loans at the next TLTRO starting September. That could help limit any reduction in the ECB’s balance sheet from TLTRO II repayments. Across the Atlantic, FOMC minutes this morning reiterated the Fed’s earlier messaging, with a number of officials noting rates could go up or down. Minutes suggest Fed officials are comfortable that the US economy can weather slowing global growth, but patience is paramount.”
DJIA levels
From a technical perspective, the DJIA is struggling to hold the bid and is heavy, testing bull’s commitments at Feb’s resistance. On a break there, the 19th March highs (26100) to that first bearish target at the 25700s (50-D SMA) ahead of the 200-DMA which is located in the 25200s guarding a break all the way down to 24800 gap area ahead of the 24500s and then 50% of the upside run made at the end of Dec at 24200.
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