Fed Minutes Stoke Wall Street Rally

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Minutes showing the Federal Reserve won't necessarily begin reining in its highly-accommodative monetary policy in the near future added to broad gains led by energy, materials and technology stocks. 

Today's Markets

The Dow Jones Industrial Average gained 80.6 points, or 0.65%, to 12,560, the S&P 500 was up 11.7 points, or 0.88%, to 1,341 and the Nasdaq Composite climbed 31.8 points, or 1.1%, to 2,815. The FOX 50 traded higher by 6.1 points to 939.  

Energy stocks like Chevron (CVX) and ExxonMobil (XOM) performed the best on the day, driven by significant gains in the commodities complex. Materials issues like Freeport-McMoRan Copper (FCX) and Potash (POT) rallied as well. 

Central bank officials began developing plans to pullback on expansionary monetary policy, although didn't necessarily feel rushed to do so, the minutes show.  Most officials preferred to hike short-term interest rates before selling so-called agency securities. 

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Fed officials were cognizant of increases in so-called headline inflation driven by a surge in energy prices, but the policy-making board noted inflation increases excluding food and energy were in line with the prior year.  Long-term inflation expectations remain "within the range that has prevailed over the past several years," the minutes said. 

Inflation expectations are one of the Fed's major concerns because they tend to cause a rippling effect throughout the economy that is very difficult to reverse. Since expectations were largely in check, the Fed has more breathing-room when it comes to timing of its exit. 

A relatively bullish inventory report from the Energy Department charged a rally in energy contracts on the day.  

Crude inventories were down 15,000 to 370.31 million barrels last week, compared with an the 1 million barrel build analysts expected.  Gasoline stocks were up 119,000 to 205.94 million barrels, a smaller increase than the 800,000 Wall Street was looking for. 

Stocks in Cushing, Oklahoma, which is the shipping point for crude traded on the New York Mercantile Exchange were down 1.59 million to 40.02 million, but remain near historic highs. 

Light, sweet crude soared $3.19, or 3.3%, to $100.10 a barrel.  Wholesale RBOB gasoline was higher by 4 cents, or 1.2%, to $2.96 a gallon. RBOB prices are off 16% since the beginning of the month, but still up 19% on a year-to-date basis.  

Consumer gas prices are on a modest downtrend.  A gallon of regular gas cost $3.93 on average nationwide, down from $3.96 last week,  but up from $2.86 last year. 

In metals, gold gained $15.80, or 1.1%, to $1,495 a troy ounce.  Silver was up $1.61, or 4.8%, to $35.09 a troy ounce. 

In currencies, the euro was up 0.04% against the U.S. dollar and the greenback was up 0.07% against a basket of world currencies. 

"The U.S. Stock market has been really tied to what has been going on with the dollar and the euro," said Frederic Dickson, chief investment strategist at D.A. Davidson.

Since commodities are traded in U.S. dollars, even moderate movements in exchange rates often have a strong impact on commodity price movements. In turn, volatility in commodities -- particularly the intense tumult seen recently -- ripples through equities markets, Dickson said.

Traders also kept an eye on the debt situation in Greece. The embattled nation is hoping to raise funds to partly pay off its nearly half a trillion dollar debt load by privatizing several government-held entities in a bid to stave off a costly debt restructuring.

Jean-Claude Junker, chairman of the euro group, acknowledged for the first time this week that a soft debt restructuring, which would likely involve pushing back maturity dates on Greek debt, was a possibility.  However, he strongly cautioned against a restructuring entailing haircuts for bondholders. 

The situation in Greece presents a "modest-level" risk to U.S. market, Dickson noted. 

Corporate News

Target (TGT) unveiled first-quarter earnings of 99 cents a share on $15.94 billion in revenues.  Wall Street expected the company to earn 94 cents on $16.02 billion in revenue. The retail chain got a boost from profits in its credit card unit, which offset soft sales at many of its stores. 

Staples (SPLS) reported weaker-than-expected quarterly results.  The office supply store earned 28 cents for the quarter on $6.17 billion in revenue -- far under expectations of 32 cents on $6.2 billion.  A combination of high costs and sluggish demand also prompted the company to cut its full-year outlook. Shares were off more than 15% on the news. 

BJ's Wholesale Club (BJ) revealed first-quarters profits of 62 cents, beating Wall Street's expectations.  The chain raised its full-year outlook to $2.68 to $2.82 a share.  

Deere (DE) posted earnings of $2.12 a share in its fiscal second-quarter, zipping past estimates of $2.06 a share. The world's largest farm equipment maker benefited from a 25% increase in total sales, which now value $8.91 billion. 

LinkedIn is expected to price its initial public offering Wednesday night ahead of its IPO Thursday, which could value the professional networking site at $4 billion. 

Foreign Markets

The English FTSE 100 was up 1.1% to 5,923, the French CAC 40 gained 1.1% to 3,978 and the German DAX climbed 0.65% to 7,304. 

In Asia, the Japanese Nikkei 225 rallied 1% to 9,662 and the Chinese Hang Seng traded higher by 0.47% to 23,011. 

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