US close: Wall Street buoyed by rise in crude oil futures
US stocks edged higher on Friday as investors continued to assess the Federal Reserve’s meeting minutes which showed policymakers were divided over the timing of an interest rate hike and crude oil futures moved sharply higher.
The Dow Jones Industrial Average gained 0.13% to 18,597.70 points, the S&P 500 was up 0.22% to 2,187.02 and the Nasdaq gained 0.22% to 5,240.15 points.
Oil prices rose as the dollar weakened on the back of the Fed minutes released on Wednesday night. West Texas Intermediate crude increased $1.32 to $48.22 per barrel.
Investors were left baffled by the minutes of the Fed's July meeting, released late on Wednesday. The minutes revealed that some policymakers believed the US economic outlook and labour market were strong enough to “warrant taking another step”. Although others urged caution, saying more economic data was needed.
“Judging from the overall tone of the minutes it would appear the reality is that a strong US dollar, combined with weakening inflation gauges appears to be preventing the Fed from pulling the trigger,” said Michael Hewson, chief market analyst at CMC Markets.
“Putting that altogether and you have a perfect recipe for policy paralysis and indecision, which is a far cry from the beginning of this year when four rate hikes for 2016 appeared to be a view the Fed appeared keen to encourage.”
Turning to Thursday’s news, the Labor Department said US initial jobless claims dropped 4,000 in the week to 13 August to 262,000, compared to an unrevised 266,000 the previous week. Economists had pencilled in 265,000 claims.
“On balance, this morning’s report shows no change in the trend of low labor market separations and, all else equal, points to a healthy August employment report,” according to Barclays Research.
The Federal Reserve Bank of Philadelphia’s manufacturing sector index increased from a reading of -2.9 in July to 2.0 in August. Consensus had forecast a print of 1.3.
On the company front, shares in Wal-Mart Stores jumped after the company posted quarterly results that beat expectations, due to stronger sales.
Cisco Systems was in the red after the technology company released better-than-expected earnings late on Wednesday and said it plans to cut 5,500 jobs.
Caterpillar shares slumped after the industrial machine and equipment maker reported a drop in retail sales of machines in the three-month rolling period ending July.
Valeant Pharmaceuticals gained as it received consent for a credit facility amendment, which will provide the drugmaker additional headroom by loosening certain restrictions and giving it more flexibility to sell assets.
From a sector stand-point the best performing industrial groups were: US pipleines (4.16%), Oil Equipment and services (3.04%) and Marine transportation (2.65%).