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 Minutes of the Fed's April meeting, released on Wednesday, caught
the market by surprise as they showed that most policymakers thought
a June rate hike was appropriate, given continued improvement in the
U.S. economy.
Dow component Wal-Mart's <WMT.N> shares jumped 8.3 percent to $68.40
in premarket trading after the retailer reported first-quarter
results that beat analysts' estimates, in contrast with a string of
weak results by competitors.
Cisco Systems <CSCO.O> was up 5.2 percent at $28.10 after the
network equipment maker reported better-than-expected results.
"One of the drags on the market has been the retailer and some of
the names yesterday and today that have done well has tempered some
of those concerns," said Ed Hyland, global investment specialist at
JP Morgan Private Bank in Atlanta, Georgia.
Investors will be keeping a sharp eye for further clues regarding
the trajectory of rate hikes when Fed Vice Chair Stanley Fischer
speaks at a conference at 9:15 a.m. ET (1315 GMT) in New York. New
York Fed president William Dudley is also scheduled to speak on the
economy at a separate event at 10:30 a.m. ET.
On Wednesday, Wall Street erased gains in volatile trading and
closed flat after Fed officials said they were more confident that
inflation was rising and were less concerned about a global economic
slowdown.
Following the release of the minutes on Wednesday, traders were
projecting a 34 percent chance of the central bank raising rates in
June, up from 15 percent on Tuesday, according to the CME FedWatch
tool.
"The potential for a June rate hike has put the market on edge a
little bit but we expect to see one in July and then another hike
later in the year," said Hyland.
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S&P 500 e-minis were down 5 points, or 0.24 percent, with 204,112
contracts traded at 8:34 a.m. ET. Nasdaq 100 e-minis were down 11.75
points, or 0.27 percent, on volume of 25,399 contracts. Dow e-minis
were down 38 points, or 0.22 percent, with 32,045 contracts changing
hands.
The number of Americans filing for unemployment aid fell from a 14-month high
last week, the latest sign that the economy was regaining speed after stumbling
in the first quarter.
Initial jobless claims fell to 278,000, while economists were expecting a fall
of 275,000.
Oil prices dropped more than 2 percent, falling for the second straight day on
speculation of a rate hike and as U.S. inventories recorded an unexpected
increase. [O/R]
Advance Auto Parts slumped 10.3 percent to $129.02 after the auto parts retailer
cut its full-year comparable sales forecast.
Monsanto was up 7.8 percent at $104.50 after disclosing German group Bayer has
made an unsolicited takeover proposal.
(Reporting by Yashaswini Swamynathan; Editing by Don Sebastian)
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