U.S. stocks were little changed near records, while the dollar traded close to a three-week high versus the euro after Federal Reserve meeting minutes indicated officials probably won’t raise interest rates in June, without removing the prospect of higher borrowing costs this year.
The Standard & Poor’s 500 Index was down 0.1 percent by 4 p.m. in New York, ending four points below an all-time high. The Bloomberg Dollar Spot Index climbed 0.1 percent for a third day of gains. Yields on 10-year Treasury notes fell four basis points to 2.25 percent. U.S. crude jumped 1.7 percent.
While Fed officials reiterated they could boost rates at any meeting, many policy makers thought economic data available in June would not be robust enough to warrant higher borrowing costs, according to the minutes. Dollar traders are speculating the Fed will tighten monetary policy ahead of central banks from Europe to Japan, which have been bolstering stimulus to ward off deflation and reignite economic growth.
“While the Fed continues to be data-dependent, they’re pushing back the timeline to later this year,” said Eric Wiegand, a senior portfolio manager at U.S. Bank Wealth Management in New York. “June is off the table. Clarity is going to come in bits and pieces in further labor data and second-quarter earnings.”
Fed officials indicated that they didn’t expect to raise rates at their June meeting even as they concluded that the first-quarter slowdown was unlikely to persist, minutes of last month’s meeting showed. A “few” members said they anticipated the economy would be ready for a June liftoff, according to the record.
Since the April meeting, there have been signs of improvement in the labor market, while weak data on manufacturing and retail sales has prompted economists to cut U.S. growth projections. Stocks fell Tuesday in New York, following three straight record closes, as a surge in home construction bolstered speculation the economy will rebound from the weak winter. The data boosted the Bloomberg dollar gauge on Tuesday to its biggest two-day rally since 2011.
“I can’t see them raising rates because that would strengthen the dollar further,” Randy Bateman, the chief investment officer of Huntington Asset Advisors, which manages about $2 billion in the funds, said by phone. “We had such a weak first quarter. We still have that strong dollar to contend with.”
The greenback added 0.5 percent to $1.1094 per euro, and climbed 0.6 percent in a fifth day of gains, to 121.35 yen. Of 16 major currencies tracked by Bloomberg Wednesday, 12 weakened against the dollar, led by the South Korean won.
Gains in the U.S. currency have generally hurt shares of the biggest companies on speculation they make American products less attractive overseas.
Among stocks moving Wednesday, Southwest Airlines Co. fell 9.1 percent to a six-month low, leading a retreat among air carriers. Lowe’s Cos. slid 4.6 percent after reporting first-quarter profit that trailed analysts’ estimates.
Yahoo! Inc. rebounded, snapping a three-day slide, after saying that it’s pushing ahead with plans to spin off a stake in Alibaba Group Holding Ltd. The stock plunged 7.6 percent on Tuesday after the Internal Revenue Service said it may make changes to the tax-free treatment of spinoffs.
In the debt market, Treasuries maturing in 10 years or longer have lost 5.1 percent this month, on track for the worst performance since February, according to Bloomberg U.S. Treasury Bond Index data. European government bonds, which helped fuel a rout in U.S. notes by selling off earlier this month, extended declines Wednesday. The Stoxx Europe 600 Index rose 0.4 percent for a third day of gains.
The European Central Bank consented to increase the cap on Emergency Liquidity Assistance for Greek banks, according to people familiar with the discussion, asking not to be named as the matter isn’t public. European Union leaders meet in Riga, Latvia, on Thursday.
European stocks and bonds rose Tuesday after a ECB official said the lender will bring forward some asset purchases before an anticipated lull in summer liquidity.
Citicorp, JPMorgan Chase & Co., Barclays Plc and Royal Bank of Scotland Plc agreed to plead guilty to conspiring to manipulate the price of dollars and euros in settlements with the Justice Department announced in Washington Wednesday.
UBS Group AG gained 3.2 percent after saying its main unit will plead guilty to fraud in the U.S. for manipulating benchmark interest rates and pay $203 million in fresh fines.
The MSCI Emerging Markets Index slid 0.5 percent. Hanergy Thin Film Power Group Ltd., a Chinese solar equipment maker, plummeted 47 percent in Hong Kong trading before the stock was suspended, dragging down technology shares.
West Texas Intermediate crude for July delivery settled at $58.98 a barrel, ending a five-day retreat. Brent, the international benchmark, climbed 1.6 percent to end at $65.03. Crude inventories declined 2.67 million barrels last week, according to the Energy Information Administration. Refinery operating rates rose for the third time in four weeks.
Gold added 0.2 percent Wednesday to $1,209.83 an ounce, after tumbling 1.5 percent Tuesday. The Bloomberg Commodity Index gained 0.1 percent after sinking 2.6 percent over the previous three days.