By Mark DeCambre
U.S. stocks closed mostly lower Wednesday, but the Dow Jones Industrial Average booked its third straight record close, after minutes from the Federal Reserve’s January meeting showed officials were skeptical about the economy improving enough to warrant removing monetary stimulus any time soon.
The release of central bank minutes capped a series of economic reports that showed a healthy economy, along with some signs of rising inflation.
How did stock benchmarks perform?
The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -0.94% gained 90.27 points, 0.3%, to close at 31,613.02.
The S&P 500 index /zigman2/quotes/210599714/realtime SPX -0.92% lost 1.26 points to reach 3,931.33, a decline of less than 0.1%.
The Nasdaq Composite /zigman2/quotes/210598365/realtime COMP -0.94% gave up 82 points, or 0.6%, to close at 13,965.49.
On Tuesday , the Dow ended at a record, but the S&P 500 and the Nasdaq Composite indexes snapped a two-day string of gains to end lower.
What drove the market?
Fed policy makers reiterated that they want to see sustained inflation before they even consider ending their bond-buying program and start to raise interest rates, January meeting minutes confirmed.
The Fed update came after data showed U.S. retail sales jumped 5.3% in January, crushing estimates, after a 1% decline in December as COVID cases spiked.
A separate report on industrial production from the Federal Reserve showed a rise of 0.9% in January, also trouncing economist forecasts of a 0.5% gain. Businesses restocked their inventories more than expected in December, but a reading on home-builder confidence was stronger than expected.
However, the producer-price index jumped by 1.3% in January, the largest monthly increase since the index underwent a major overhaul in 2009 and service prices were included in the report. The rate of wholesale inflation in the past 12 months climbed to 1.7% from 0.8% at the end of 2020—not far from the pre-pandemic level of 2%.
Good recent economic data has been helping to boost U.S. bond yields, as investors look ahead to the prospect of more fiscal stimulus from Congress and declining coronavirus cases . On Tuesday, the 10-Treasury note /zigman2/quotes/211347051/realtime BX:TMUBMUSD10Y -1.01% hit a yield near 1.30%, its highest level since Feb. 26, according to Dow Jones Market Data.
“The retail sales numbers were stunning, and PPI was very very strong too, but we’ve had a series of down months before that,” said Peter Andersen, founder of Boston-based Andersen Capital Management. “It’s just too hard to extrapolate based on one month. It could show pent-up demand but the supply demand dynamic right now is still too hard to filter. I’m thinking it could show what the pent-up demand is once we get through the vaccine roll-out. We’ll be off to the races.”
In an interview with MarketWatch, Andersen said he was “really shocked at the attention that investors are giving to shiny items like bitcoin, space exploration, SPACs.” The market could use a little direction from more news about vaccine progress, he said, but overall, other than a few frothy areas, isn’t worrisome.