Bulls Seize the Minutes

The stock market cheered itself Wednesday.

In an afternoon rally, traders celebrated how well the market shrugged off a correction in Chinese stocks and relatively hawkish minutes of the Fed's May 9 meeting, which gave no indication that rate cuts are on the horizon.

The Shanghai Composite index fell 6.5% overnight as it dragged down other Asian and European indices. But the shock value of the Chinese selloff overnight Tuesday was minimal after former Fed Chairman Alan Greenspan foreshadowed it last week, and after China's February plunge sparked a U.S. stock market pullback, says Tony Dwyer, equity market strategist at FTN Midwest Securities.

Todd Leone of Cowen & Co. fumed that China's selloff was telegraphed Tuesday when news emerged that the country was increasing a tax on stock transactions. "Wednesday morning's selloff I thought was crap," he snipped.

As for the Fed minutes, the message was clear from the central bank that it knows as little about the next move on interest rates as anyone in the market. That's just fine with traders as long as the hike is just as distant a concept as the cut.

"Housing will keep the consumer growing slowly, and business spending will make a comeback. ... I couldn't have written it better myself," says Dwyer of the Fedspeak. He believes the tepid consumer side of the economy paired with a strong business and rebounding manufacturing sector makes for the soft-landing scenario stock investors want to see.