Wall St. Opens Higher After Fed Signals Slow Tightening
Wall Street was higher at the open, a day after the Federal Reserve said the U.S. economy is likely strong enough to withstand an interest rate increase later this year but indicated that the pace of a hike will be slower than expected.
The Fed cut its economic growth forecasts for 2015 because of a weak start to the year. Even if a majority of Fed officials continue to see higher rates by the end of 2015, they expect rates to rise slightly less by the end of 2016 and 2017 than they did in their March forecasts.
In a press conference following the end of the Fed’s two-day policy meeting on Wednesday, Fed Chair Janet Yellen said she wanted “more decisive evidence” that labor markets were healing, and that wages would increase beyond their current “subdued pace.”
Yellen added that the Fed remains data-dependent, which will prompt investors to keep a sharper eye on the data in the coming months, especially on the monthly employment report.
“If we see the kind of jobs data that we saw last month, that would keep the Fed on path to raise rates once in September and may be again in December,” said Art Hogan, chief market strategist at Wunderlich Securities in New York.
U.S. consumer prices in May recorded their largest increase in more than two years as gasoline prices surged. The Consumer Price Index rose 0.4 percent last month after gaining 0.1 percent in April.
Other data showed the labor market continued to tighten as first-time applications for unemployment benefits declined last week to a near 15-year low.
At 9:36 a.m. ET the Dow Jones industrial average .DJI was up 107.9 points, or 0.6 percent, at 18,043.64, the S&P 500 .SPX was up 8.98 points, or 0.43 percent, at 2,109.42 and the Nasdaq Composite .IXIC was up 29.47 points, or 0.58 percent, at 5,094.35.
All of the 10 major S&P 500 sectors were higher with the health index .SPXHC leading the gains with a 0.64 percent rise.
Greece continues to weigh on investors’ minds as the country drifts closer to a default.
Euro zone officials have not discussed the debt restructuring proposed by Greece because they want Athens to first implement the reforms it promised in exchange for loans it got from the euro zone, the head of euro zone finance ministers said.
Oracle (ORCL.N) shares fell 7.4 percent to $41.66, a day after the company forecast quarterly profit below analysts’ estimates.
Rite Aid (RAD.N) was down 4.7 percent at $8.50 after the No. 3 U.S. drugstore chain operator reported slower-than-expected quarterly same-store sales growth as the introduction of new generic drugs hurt pharmacy sales.
Kroger (KR.N), rose 1.4 percent to $74 after the biggest U.S. supermarket operator reported a rise in quarterly profit.
Advancing issues outnumbered decliners on the NYSE by 1,919 to 696. On the Nasdaq, 1,562 issues rose and 646 fell.
The S&P 500 showed 20 new 52-week highs and no new lows, while the Nasdaq recorded 44 new highs and 11 new lows.