US stocks edged higher in afternoon trading on Wednesday to close higher after the release of the US Federal Reserve’s minutes for the May 3-4 meeting.
The S&P 500 gained nearly 1% to close at 3,973.73, while the Dow Jones Industrial Average added 191.66 points, rising by 0.6% to end at 32,120.28. Meanwhile, the Nasdaq Composite jumped 1.5% after weathering early weakness to close at 11,434.74.
The 10-year US Treasury yield remained largely unchanged at around 2.75%. Elsewhere, gold fell 0.7% to $1,852 per ounce as Bitcoin remained weak near $30,000.
FOMC minutes
The slight gains came after the Federal Open Committee Meeting (FOMC) minutes revealed an agreement among Fed officials that inflation was “elevated, reflecting continued supply and demand imbalances, higher energy prices, and broader price pressures.”
In light of continuing inflation risks, members judged that it would be appropriate for the postmeeting statement to note that the Committee is highly attentive to the upside risks to inflation.”
The minutes also indicated that the central bank’s thinking on rates was beyond the 50bps hikes on the table for the next two meetings. Also key is an aggressive reduction of the Fed’s balance sheet.
All participants reaffirmed their strong commitment and determination to take the measures necessary to restore price stability. To this end, participants agreed that the Committee should expeditiously move the stance of monetary policy toward a neutral posture, through both increases in the target range for the federal funds rate and reductions in the size of the Federal Reserve’s balance sheet
Snap, Tesla jump after Tuesday’s sell-off
On Tuesday, stocks had witnessed a major sell-off in the tech sector, with social media app Snap (SNAP) tanking to precipitate panic moves across the sector. Tesla (TSLA) had also raced 7% lower amid broader selling pressure and concerns over the economy.
On Wednesday, SNAP rose 10.7% while TSLA gained 4.9%. Twitter (TWTR) shares were also up on the day at 3.9%, with post-market trading seeing the stock rally over 7% following news that Elon Musk had made a further commitment on his takeover bid.
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