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American Airlines falls on downbeat Q1 profit outlook
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Indexes up: Dow 0.51%, S&P 0.34%, Nasdaq 0.05%
(Updates to afternoon, adds NEW YORK dateline, changes byline)
By Stephen Culp
NEW YORK, April 12 (Reuters) - The S&P 500 gained
ground on Wednesday after minutes from the Federal Reserve's
March policy meeting revealed several voting members of the
Federal Open Markets Committee (FOMC) considered a pause in
interest rate hikes amid the regional bank liquidity crisis.
The minutes followed a cooler-than-expected inflation report
which belied stickier underlying data and cemented the
likelihood of another policy rate hike when the Fed convenes
next month.
All three major U.S. stock indexes were last in positive
territory, with cyclical sectors putting the blue-chip Dow in the lead.
"The Fed is a consensus driven institution," said Zach Hill,
head of portfolio management at Horizon Investments in
Charlotte, North Carolina. "The market has been very eager to
trade that peak policy Fed behavior - the pause and pivot - and
the Fed is not communicating that at all."
The major indexes seesawed as market participants parsed the
Labor Department's Consumer Price Index (CPI).
That report, on prices urban consumers pay for a basket of
goods and services, came in below analysts' expectations,
suggesting that the Fed's efforts to tame inflation is taking
effect.
However, core CPI - which strips out volatile food and
energy items - hit the consensus bull's eye, and remains well
above the Fed's average annual 2% target rate.
"We saw progress on headline inflation and people started
digging in and the initial optimism reversed," Hill added. "The
core numbers have seen improvement but they’re well above where
they need to be."
Earlier in the session Richmond Fed President Tom Barkin
underscored that reality, remarking that inflation has a long
way to go before approaching that target.
At last glance, financial markets have priced in a 71%
likelihood of another 25 basis point interest rate hike at the
conclusion of the FOMC's policy meeting next month, and a 29%
probability the Fed funds target rate will remain at 4.75% to
5.00%.
The next market-moving catalyst is likely to be
first-quarter earnings season, which kicks off on Friday with
results from three big banks - Citigroup Inc , JPMorgan
Chase & Co and Wells Fargo & Co .
Analysts now expect aggregate first-quarter S&P 500 earnings
down 5.2% year-on-year, a stark reversal from the 1.4% annual
growth seen at the beginning of the quarter.
At 2:06 p.m. ET, the Dow Jones Industrial Average rose 172.28 points, or 0.51%, to 33,857.07, the S&P 500 gained 14.01 points, or 0.34%, at 4,122.95 and the Nasdaq
Composite added 5.68 points, or 0.05%, at 12,037.56.
Among the 11 sectors of the S&P 500, industrials were enjoying the largest percentage gain, while consumer
staples and consumer discretionary were both
in the red.
American Airlines Group Inc slid 9.1% after it
forecast a lower-than-expected first-quarter profit.
Advancing issues outnumbered decliners on the NYSE by a
1.80-to-1 ratio; on Nasdaq, a 1.04-to-1 ratio favored decliners.
The S&P 500 posted 12 new 52-week highs and two new lows;
the Nasdaq Composite recorded 61 new highs and 143 new lows.
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(Reporting by Stephen Culp; Additional reporting by Sruthi
Shankar, Ankika Biswas in Bengaluru and Richard Chang)
