Dow, S&P 500 top 17K, 2000 on Fed news

October 09 07:51 2015

The stock rally on Wall Street picked up steam Thursday as investors focused on the Federal Reserve’s continued worries about low inflation after the release of minutes from the Fed’s latest policy meeting. The three major benchmarks, mixed ahead of the 2 p.m. ET release, moved solidly into the black as the afternoon wore on. ”Investors will be dissecting the minutes . . . with a fine-toothed comb,” said Karee Venema, an analyst at Schaeffer’s Investment Research, before the release.USA - Business - Dow Jones Sign

The Dow Jones industrial average was up about more than 155 points, or 0.9% and back above 17,000 at 17,070. The Standard & Poor’s 500 index was up 1% and broke out above the key 2000 mark Wall Street had been hoping for. The Nasdaq composite index — negative for all of the morning and gradually climbing after the Fed news — is up 0.5%.

But after reviewing the Fed minutes, in which the central bank said it was still worried about low inflation readings, stocks rallied as the odds for an interest rate hike this year shrank some more. Wall Street was also emboldened by signs that the Fed decision to hold off on rate hikes last month was not as close of a call as originally feared, another sign that hikes might not come until next year.

“The minutes were more friendly than the Street was expecting,” Steven Ricchiuto, chief economist at Mizuho Securities USA told clients in a report. “The market wanted the minutes to suggest that the decision to pass in September was a close call. Instead, the minutes show that the tone of the press conference fully reflected the Committees view. The key was the word prudent.” Paul Ashworth, an economicst at Capital Economics, says the Fed is likely to wait until March 2016 before raising interest rates, citing a spate of weak economic reports as adding to Fed fears about the global economy due to the China slowdown. Fresh political risks could give the Fed another reason to be patient before hiking rates, he added.