Stocks Rise on Fed as Investors Discount Cyprus Deadlock
NEW YORK (TheStreet) -- U.S. stocks closed higher Wednesday as the Federal Reserve's policy-making announcement forecast a return to moderate economic growth and repeated its commitment to stimulate the economy by buying bonds and other securities.
The S&P 500 rose 0.67% to 1,558.71 to end a three-day skid. First Solar (FSLR) ended the session as one of the S&P's top performers after competitor Suntech Power Holdings announced that eight Chinese banks had filed a petition for insolvency and restructuring of its Chinese subsidiary, Wuxi Suntech Power Holdings. Shares of First Solar popped 5.9% to $29.48.
The Fed's announcement further placated investor concerns that Cyprus legislators would be unable to fashion a plan to rescue its beleaguered banks.
"I think there's probably a little bit less angst and panic that we're hearing [from the Fed]," Erik Davidson, deputy chief investment officer at Wells Fargo Private Bank, said in a phone interview. "The fact that the market has now recovered from those losses [incurred from worries about Cyprus] makes sense -- the U.S. economy is bumbling along, not great, but there's no talk of a recession."Cyprus may be seeking financial assistance from Russia after a proposal to tax depositors was defeated yesterday in the country's parliament. Cypriot Finance Minister Michael Sarris was to hold talks with Russian Finance Minister Anton Siluanov in Moscow on Wednesday. There was no word yet of any agreement but discussions were said to be continuing. Russians are among the largest depositors to Cypriot banks. Cyprus banks may stay closed until next Tuesday, according to multiple reports, to avert bank runs as solvency fears mount. In Washington, the Federal Open Market Committee said that "labor market conditions have shown signs of improvement in recent months but the unemployment rate remains elevated,'' a reason that central bank intends to maintain its asset-buying program. The Nasdaq closed up by 0.78% to 3,254.19 while the Dow Jones Industrial Average advanced 55.91 points, or 0.39%, to 14,511.73. In Europe, the FTSE 100 in London slipped 0.13% and the DAX in Germany gained 0.71%. The benchmark 10-year U.S. Treasury cooled down by 15/32, bringing the yield to 1.959%. The dollar was falling 0.22%, according to the U.S. dollar index. May crude oil futures rose 80 cents to settle at $92.96 on the New York Mercantile Exchange. A number of energy stocks were popping after Anadarko Petroleum (APC) said late Tuesday that it has discovered more than 1,000 feet of oil-containing rock in its Shenandoah-2 well in the deep waters of the Gulf of Mexico. Anadarko is also the operator of the Shenandoah-1 well in the Gulf of Mexico. Shares of the oil producer tacked on 3.8% to $86.40. Other co-owners in the Shenandoah wells are ConocoPhillips (COP), Cobalt International Energy (CIE), Venari Resources and Marathon Oil Company (MRO). ConocoPhillips, Marathon Oil and Cobalt International shares were all jumping on the announcement, with Cobalt's surging 8.1% to $27.87. Although the U.S. economic outlook has exhibited signs of improvement since the central bank's Jan. 30 meeting, Jan Hatzius and Jari Stehn, economists at Goldman Sachs in New York, said in a note published Tuesday evening that they expected the Fed's asset purchases to continue until the third quarter of 2014 and do not project a rate hike until early 2016. Fed Chairman Ben Bernanke spoke at a press conference that began at 2:30 p.m. FedEx (FDX) shares slid 6.9% to $99.13 after the delivery service giant lowered its fiscal-year earnings guidance to $6 to $6.20 a share and forecast fourth-quarter adjusted earnings of $1.90 to $2.10 a share, compared with the average analyst estimate of $2.07 a share in the quarter and $6.31 a share for the year. The company spoke of declining international revenues as a growing number of customers shift towards cheaper services. Adobe Systems (ADBE) gained 4.2% to $42.46 after San Jose, Calif.-based software maker reported fiscal first-quarter results Tuesday that topped analysts' expectations. Adobe posted earnings of 35 cents a share, excluding items, on revenue of $1.01 billion. Analysts were looking for net income of 31 cents share on sales of $985.2 million. Written by Andrea Tse and Joe Deaux in New York >To contact the writer of this article, click here: Andrea Tse.
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