MarketView for April 9

Summary

The major equity indexes ended up more than 1 percent, with eight of the 10 S&P 500 sector indexes closing higher on Wednesday after minutes from the Federal Reserve's latest policy meeting indicated a more supportive Fed than the Street had previously thought. Internet and biotech stocks were among the day's biggest gainers.

Fed policymakers were unanimous in wanting to ditch the thresholds they had been using to telegraph a policy tightening, according to minutes of a meeting last month that shed little new light on what might prompt an eventual interest-rate rise.

Despite a previous three-day selloff, the S&P 500 managed on Tuesday to hold above its 50-day moving average around 1,840, a key support level. The index has successfully defended the 1,840 area several times over the past month. In Wednesday's regular session, the S&P 500 swung from a session high of 1,872.43, just a notch above its closing level, to an intraday low at 1,852.38.

The Nasdaq biotechnology index rose 4.1 percent to close at 2,455, while the Global X social media index gained 3.3 percent to end at 19.11.

Alcoa rose 3.8 percent to end the day at $13. The stock ranked as one of the S&P 500's best performers after the aluminum producer's earnings, excluding restructuring charges and other special items, exceeded Street expectations.

S&P 500 companies' first-quarter earnings are projected to have increased just 1 percent from a year ago, Thomson Reuters data showed, down sharply from the start of the year, when profit growth was estimated at 6.5 percent.

In the latest snapshot of the economy, Commerce Department data indicated that wholesale inventories rose at a slower pace of 0.5 percent in February, in line with expectations, after a revised gain of 0.8 percent in January, which could support views that restocking did not help the economy in the first quarter.

Going against the day's sharp advance, shares of Intuitive Surgical fell 6.8 percent to close at $456.64 after the company estimated first-quarter revenue well below analysts' expectations mainly due to a 60 percent drop in sales of its flagship da Vinci robot system.

Shares of Blackstone-backed hotel chain La Quinta Holdings saw a subdued market debut due to the opinion that the stock was fully priced in a crowded IPO market. The shares closed up 0.7 percent at $17.12.

Approximately 6.3 billion shares changed hands on the major equity exchanges, a number that was below the 6.9 billion share average so far this month, according to data from BATS Global Markets.

Fed Struggles

The Federal Reserve struggled last month over how to convey to investors that it will raise short-term interest rates only slowly once it increases them from record lows. Two weeks before the Fed's regular meeting March 18-19, it held an unusual and previously unannounced videoconference to debate the issue, according to minutes of the meeting released Wednesday.

In the end, the Fed settled on an open-ended approach: That even after employment and inflation are nearly back to normal, short-term rates may need to stay unusually low for a while because the economy isn't fully healthy.

The Street uses the minutes as assurance that the Fed won't raise rates sooner or faster than expected. Therefore, do not look for early or very many rate hikes any time soon because the minutes would therefore appear to affirm that the first increase in interest rates will not occur until mid-2015, with some on the Street of the opinion that rate hikes will not begin until late next year.

Investors have been intensely following the Fed's guidance on rates because higher short-term rates would elevate borrowing costs and could hurt stock prices.

The minutes covered the first Fed meeting at which Chair Janet Yellen presided as well as the March 4 videoconference. At both sessions, the issue of the language the Fed uses in its statements to signal the timing of future policy actions was a topic of extended debate.

The Fed has kept its key short-term rate at a record low near zero since December 2008. It made no change to that rate at the March meeting. But it dropped language from its statement that had previously said this rate would likely remain low "well past" the time unemployment fell below 6.5 percent. Instead, the Fed said it would review a "wide range of information" before starting to raise rates. It repeated language that it expected to keep rates low for a "considerable time" after it stops buying bonds.

Also at the March meeting, the Fed approved another cut in its monthly bond purchases of $10 billion to $55 billion a month. Those purchases are intended to keep long-term loans rates low to spur borrowing, spending and economic growth. The monthly purchases had been held at a level of $85 billion a month all last year. The Fed announced an initial $10 billion cut in December and another in January.

It is likely that the Fed will continue to reduce purchases by $10 billion each meeting this year until they end altogether by late this year.

Asked at a news conference after the Fed's meeting last month to define a "considerable time," Yellen said it "probably means something on the order of six months." Her remark jolted markets. It seemed to signal that the first rate hike could occur next spring, sooner than many investors had been expecting.

However, in a  March 31, speech, Yellen made it clear that she thought the job market was still far from healthy and would need the help of low rates "for some time" to come. The minutes appeared to confirm that short-term rates will likely remain low for a considerable time, even after the Fed has begun to raise rates.