US close: Stocks fall flat after FOMC minutes raise rate odds

US stocks had the wind taken out of their sales by a surprisingly hawkish set of meeting minutes from the Federal Reserve's rate setters.

Having risen early doors on Wednesday, by the close the Dow Jones Industrial Average closed 0.02% lower at 17,526.62, though the S&P 500 climbed 0.02% to 2,047.63 and the Nasdaq added 0.5% to 4,739.12.

Minutes from the FOMC committee meeting last month showed a hike in short-term interest rates would be on the table when they reconvene in mid-June, with a few participants already wanted to hike at the April meeting.

The key phrase in the minutes was that “most participants judged that if incoming data were consistent with economic growth picking up in the second quarter, labor market conditions continuing to strengthen, and inflation making progress toward the Committee’s 2% objective, then it likely would be appropriate for the Committee to increase the target range for the federal funds rate in June."

With the second quarter already looking better than the first, the odds of a June hike are likely to be higher than the near-30% the market was pricing before the release of minutes.

"It's not a slam-dunk," said Ian Shepherson, chief economist at Pantheon Macroeconomics. "The risk of a Brexit vote just eight days after the FOMC meeting—cited by 'some' members as a threat—points to caution on the part of the Fed.

"Given that many members are yet to be convinced there's much upside inflation risk, the FOMC is unlikely to conclude that the cost of waiting a few weeks is very high. A Brexit vote would likely trigger chaos in European markets, to which the US is not immune," he added.

Rabobank US strategist Philip Marey said the minutes supported his call for two hikes in 2016, in June and December.

He added: "We also like to point out that the primary downside risk to our forecast lies in the employment report for May. An inconclusive report may elevate the risks that are still in the minds of the Committee. If US economic momentum appears to be fragile, then concerns about China, and the implications of a possible Brexit could weigh more heavily on the minds of the Fed."

While the dollar was inflated by the rate hike hawkishness, oil prices were already reeling as a report from the Energy Information Administration showed US crude oil inventories rose 1.3m barrels to a historical high of 541.3m barrels in the week ended 13 May. West Texas Intermediate was down 1% to $47.81 per barrel and Brent fell 1.6% to $48.48 per barrel after the stock markets closed.

On the corporate front, Target’s shares plunged after the retailer reported a lower-than-expected increase in first quarter sales at established stores.

Lowe’s gained after the home improvement chain posted quarterly sales that beat estimates.

FedEx rose after saying its planned takeover of TNT Express should settle on 25 May.

Staples advanced as is reported first quarter earnings that surpassed analysts’ estimates.

S&P 500 - Risers
Citizens Financial Group, Inc. (CFG) $23.13 +6.00%
E*TRADE Financial Corp. (ETFC) $26.65 +5.84%
Huntington Bancshares Inc. (HBAN) $10.29 +5.32%
Regions Financial Corp. (RF) $9.64 +5.13%
Citigroup Inc. (C) $45.87 +4.97%
Charles Schwab Corp. (SCHW) $29.29 +4.91%
Keycorp (KEY) $12.52 +4.86%
Bank of America Corp. (BAC) $14.69 +4.85%
Western Digital Corp. (WDC) $38.46 +4.65%
Fifth Third Bancorp (FITB) $18.28 +4.58%

S&P 500 - Fallers
Hormel Foods Corp. (HRL) $35.48 -8.56%
Freeport-McMoRan Inc (FCX) $10.54 -8.43%
Target Corp. (TGT) $68.00 -7.62%
United States Steel Corp. (X) $13.25 -6.23%
Newmont Mining Corp. (NEM) $33.52 -5.71%
ONEOK Inc. (OKE) $40.13 -4.50%
National Oilwell Varco Inc. (NOV) $31.45 -4.17%
Mosaic Company (MOS) $25.23 -3.70%
Duke Energy Corp. (DUK) $76.57 -3.70%
Best Buy Co. Inc. (BBY) $30.75 -3.57%

Dow Jones I.A - Risers
JP Morgan Chase & Co. (JPM) $64.04 +3.86%
Goldman Sachs Group Inc. (GS) $159.94 +3.42%
American Express Co. (AXP) $63.52 +1.21%
Apple Inc. (AAPL) $94.56 +1.14%
Visa Inc. (V) $77.43 +0.83%
Travelers Company Inc. (TRV) $111.30 +0.80%
Unitedhealth Group Inc. (UNH) $130.51 +0.73%
Merck & Co. Inc. (MRK) $54.67 +0.64%
Microsoft Corp. (MSFT) $50.81 +0.59%
Pfizer Inc. (PFE) $33.17 +0.42%

Dow Jones I.A - Fallers
Wal-Mart Stores Inc. (WMT) $63.15 -3.00%
Nike Inc. (NKE) $56.12 -1.72%
Boeing Co. (BA) $130.99 -1.18%
McDonald's Corp. (MCD) $126.21 -1.16%
Verizon Communications Inc. (VZ) $50.39 -1.00%
Procter & Gamble Co. (PG) $79.85 -0.96%
Walt Disney Co. (DIS) $99.00 -0.94%
E.I. du Pont de Nemours and Co. (DD) $63.99 -0.84%
United Technologies Corp. (UTX) $99.29 -0.77%
Chevron Corp. (CVX) $100.06 -0.68%

Nasdaq 100 - Risers
Charter Communications Inc. (CHTR) $227.41 +11.83%
Western Digital Corp. (WDC) $38.46 +4.65%
Micron Technology Inc. (MU) $10.05 +3.93%
Biomarin Pharmaceutical Inc. (BMRN) $87.16 +3.70%
Tesla Motors Inc (TSLA) $211.17 +3.18%
Seagate Technology Plc (STX) $20.24 +3.08%
Nxp Semiconductors Nv (NXPI) $87.03 +2.69%
Endo International Plc (ENDP) $15.57 +2.64%
Incyte Corp. (INCY) $77.53 +2.62%
Nvidia Corp. (NVDA) $43.36 +2.55%

Nasdaq 100 - Fallers
Dollar Tree Inc (DLTR) $75.33 -2.81%
Discovery Communications Inc. Class A (DISCA) $26.71 -2.70%
Mattel Inc. (MAT) $29.81 -2.55%
TripAdvisor Inc. (TRIP) $64.17 -2.46%
Bed Bath & Beyond Inc. (BBBY) $42.00 -2.42%
PACCAR Inc. (PCAR) $55.23 -2.07%
Discovery Communications Inc. Class C (DISCK) $25.93 -1.95%
Twenty-First Century Fox Inc Class A (FOXA) $28.15 -1.88%
Liberty Global plc Series C (LBTYK) $35.95 -1.72%
Dish Network Corp. (DISH) $44.90 -1.62%