US stocks finish higher after Fed minutes indicate cautious approach to future rate hikes

Apple was the best performer among the 30 companies on the Dow index

The Dow was led higher by trade-sensitive industrial stocks with exposure to the Chinese economy
The Dow was led higher by trade-sensitive industrial stocks with exposure to the Chinese economy

US stocks climbed Wednesday for a fourth straight day after minutes of the Federal Reserve’s December meeting indicated that policy makers plan to take a cautious approach to future interest rate hikes.

“Many participants expressed the view that, especially in an environment of muted inflation pressures, the committee could afford to be patient about further policy firming,” the minutes said.

The Dow Jones Industrial Average climbed 91 to 23,878. The tech-laden Nasdaq was up 0.87% to 6,957.59.

Apple Inc (NASDAQ:AAPL) was the best performer among the 30 companies on the Dow index, rising 1.8% to $153.31, after a report that the company was reducing planned production of its three new iPhone models by about 10%.

Caterpillar Inc (NYSE:CAT) rallied on the prospect of a trade agreement between the US and China, climbing 1.4% to $131.63 before losing steam to finish the day at $130.27. A significant share of the company's business is done in China.

The broader-based S&P 500 Index advanced 0.4% to 2,584.96.

Constellation Brands Inc (NYSE:STZ) sank 12.4% to $150.94 as the beverage company posted an outlook for the year that missed expectations, dented by higher interest expenses. In November, the company invested $4 billion in cannabis company Canopy Growth Corp (NYSE:CGC), financing the deal with debt.

Small-caps were in positive territory, with the Russell 2000 Index up 0.06% to 1,438.

Canada was having a good day, with the S&P/TSX up 1.37% to 14,804. The Bank of Canada held its target for the overnight rate at 1.75%.

9:45AM: US stocks advance for a fourth day on signs of easing US-China trade tensions

US stocks opened higher Wednesday lifted by hopes that the United States and China would strike a deal to end their months-long trade war that has battered financial markets. 

Investors took it as a positive sign when talks, which stretched to a third day in Beijing finished Wednesday, with investors zeroing in on some positive chatter in areas such as energy commodities.

President Donald Trump also tweeted Tuesday that “Talks with China are going very well.”

Investors will be fed a heavy diet of commentary from Fed officials Wednesday, along with the 2 pm release of minutes from last month’s Federal Open Market Committee meeting. The US central bank had raised interest rates, but lowered expectations for rate increases in 2019.

The Dow Jones Industrial Average climbed 112.27 points, or 0.47%, at the open to 23,899.72 led higher by trade-sensitive industrial stocks like Caterpillar and Boeing with exposure to the Chinese economy

Meanwhile, the S&P 500 opened higher by 0.36% to 2,583.77 led higher by PG&E Corp which was up over 7%.

The Nasdaq Composite added 38.75 points or 0.56% to 6,935.75 led higher by chip maker Micron Technology which was up nearly 6.8%.

Elsewhere, the Russell 2000 index of small-cap stocks was up nearly 1.5% to 1,426.55, while the Toronto Stock Exchange was flat at 14,605.

7:22AM: Wall Street shares seen starting higher as traders await Fed minutes; oil data  

US stock futures are pointing higher mid-week after shares bounced back yesterday as traders await Fed minutes and oil market data as well as digest the latest on US-China trade talks.

European benchmarks are also higher Wednesday and Asian shares rose overnight.

Talks between the United States and China have now finished in Beijing, according to China's Foreign Ministry.

It was the first face-to-face meetings between officials since President Donald Trump and Chinese President Xi Jinping called a truce.

Yesterday, Wall Street closed higher for the third consecutive trading session.

The Dow Jones Industrial Average added 256 points at 23,787; the Nasdaq gained over 73 at 6,897. The broader-based S&P 500 index added around 24 at 2,574. In Toronto, the TSX added over 101 points at 14,605.

Apple shares (NASDAQ:AAPL) advanced 1.43% to $152.90 as CEO Tim Cook took steps to appease investors who remain unhappy about Apple’s recent move to cut its quarterly revenue forecast.

In a CNBC interview with Jim Cramer, Cook said Apple’s ecosystem of phones, tablets and computers is “probably underappreciated”.

In US futures today, the Dow Jones is up 69 points; the Nasdaq is up 21.5 points and the S&P 500 futures are up 5.75.

In London at the time of writing, the FTSE 100 is up over 64 points at 6,926; the German DAX is ahead by 96 at 10,900. The CAC 40 is up over 51 points at 4,824.

Traders await Fed minutes from its December meeting, in which it raised rates for the fourth time, but signalled a slower pace for 2019.  The report should shed more light on the central bank's thoughts.

US crude inventory data will be released later today as West Texas Intermediate is up 2.09% a barrel at $50.83. The price of crude has now advanced for eight sessions in a row, its longest winning streak since mid-2017.

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