U.S. stocks rose Wednesday, with the Dow holding onto gains of more than 200 points into market close as investors considered positive earnings results from Target and Lowe’s and digested the release of minutes from the Federal Reserve’s July meeting.
Here’s where the markets settled at the end of the regular trading session:
S&P 500 (^GSPC): +0.82%, or 23.92 points
Dow (^DJI): +0.93%, or 240.29 points
Nasdaq (^IXIC): +0.9%, or the 71.65 points
10-year Treasury yield (^TNX): +2.9 bps to 1.588%
The Fed’s July meeting minutes revealed that most Fed officials viewed July’s rate cut as a mid-cycle adjustment. This reinforced Fed Chairman Jerome Powell’s message during his post-meeting press conference last month asserting the rate cut was not the beginning of a long-term easing campaign.
However, “a couple of participants indicated that they would have preferred a 50 basis point cut,” the minutes said, with these members considering low inflation signals as justification for a deeper reduction to benchmark rates.
With all of the current risks weighing on the U.S. economy, Fed officials stressed the need for policy flexibility. At the close of the July meeting, the Fed cut rates for the first time since 2008, and markets have since priced in between 50 and 75 basis points worth of further cuts by the end of 2019.
However, two Federal Open Market Committee (FOMC) members had dissented from the Fed’s latest monetary policy decision, with each instead arguing that the economy did not need a rate cut in July. This had left market participants jittery over whether the FOMC would be willing to reduce rates further going forward, especially in the face of recent economic data underscoring robust consumer spending and a tight labor market.
Commentary from Fed Chair Jerome Powell on Friday during the central bank’s annual Jackson Hole symposium will also be closely monitored for signals for the path forward in monetary policy, giving the Fed another opportunity to streamline its messaging ahead of the next meeting.
Capital Economics economist Paul Ashworth said last week that the remarks could “trigger carnage in the bond and equity markets” if the public statements fail to appease market demands for clear signaling in favor of easier monetary policy.
Powell’s remarks come four weeks before the Fed’s September deliberations, which markets are estimating with near certainty will result in a 25 basis point reduction in the benchmark interest rate.
Overseas, interest rates have broadly turned into negative territory as a dovish bias overtakes international monetary policy amid slowing global growth. In Germany, the government sold 30-year bonds with a negative yield for the first time ever on Wednesday.
Germany auctioned off nearly $914 million worth of the negative yielding government debt – which also has a zero coupon and thus pays no interest – as investors flocked to safe haven assets and pushed up their value. Germany’s government bonds have recently languished at negative yields across the curve, and the recent 30-year bonds sale contributes to the more than $15 trillion worth of negative-yielding bonds worldwide.
A steady stream of earnings continued to roll in Wednesday, with Target (TGT) and Lowe’s (LOW) reporting before market open. Department store Nordstrom (JWN) and Victoria’s Secret parent company L Brands (LB) report quarterly results after market close.
Target topped Wall Street’s expectations in second-quarter results and raised its full-year profit guidance, with new delivery and fulfillment initiatives including in-store pickup and same-day shopping helping to drive sales higher.
E-commerce sales were also a strong point in the report. Comparable digital sales advanced 34% and contributed 1.8 percentage points to the company’s overall 3.4% same-store sales growth in the period. The results mirrored those of peer big-box retailer Walmart (WMT), which last week outperformed against expectations and boosted guidance as online sales surged.
Meanwhile, shares of Lowe’s surged in early trading after the company also reported better-than-expected quarterly sales and profit, reflecting the impact of CEO Marvin Ellison’s turnaround plan for the home improvement giant.
Ellison, who took the helm in July 2018, had said earlier this year that Lowe’s would be improving its internal systems to track inventory and pricing across the company’s stores, helping to streamline previous operational inefficiencies that had plagued the company and weighed on results. During the second quarter, Lowe’s comparable same-store sales grew 3.2% in the U.S., outperforming versus those of competitor Home Depot (HD), which reported results Tuesday.
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
Read more from Emily: