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Stocks Close Higher as Fed Minutes Reveal Optimism

NEW YORK (TheStreet) -- U.S. markets closed higher on Wednesday as minutes from the Federal Reserve's March policy meeting indicate some members wonder whether enough stimulus has been injected into the economy.

Gains were sustained throughout the day after bellwether Alcoa (AA) beat Wall Street earnings estimates to unofficially kick off first-quarter earnings season. Technology stocks also buoyed markets as the sector continued its recovery.

The Dow Jones Industrial Average closed 1.11% higher to 16,437.18 while the S&P 500 was up 1.09% to 1,872.18. The Nasdaq gained 1.72% to 4,183.9.

  • The minutes indicated the continuation of a steady pace of tapering on a general easing of headwinds to the U.S. economy. However, there were concerns that inflation continues to run below the Committee's long-run objective and ongoing worries that emerging market economies are declining from a robust fourth quarter amid a slowing pace of growth in China.
  • Facebook (FB) led the tech sector in its rebound, popping 7.3% to close at $62.41. LinkedIn (LNKD) was also on the move, jumping 4.2% after being upgraded to "buy" from "hold" at Topeka Capital with price targets maintained at $230.
  • After the bell, Ruby Tuesday (RT) posted a quarterly net loss of 12 cents a share, a 4-cent wider loss than estimated. PriceSmart (PSMT) beat earnings expectations with net income of 93 cents a share a nickel higher than consensus.
  • After Tuesday's closing bell, Alcoa said it earned 9 cents a share on an adjusted basis, ahead of expectations for 5 cents a share. Shares closed 3.8% higher. Alcoa has cut production costs to try and counter the impact of weak aluminum prices due to global oversupply.
  • S&P Capital IQ said that of the 21 companies who have reported earnings for the first quarter so far, 11 have beat analysts' estimates, eight have missed, and two have been on par.
  • Analysts, on average, now expect earnings for the S&P 500 to increase 0.21% year over year with an EPS of $26.75, according to S&P Capital IQ. Telecoms (40.5%) and consumer discretionary (8.4%) are forecast to lead the growth in the stronger performing sectors, while energy (-5.1%) and financials (-3.8%) are expected to be the biggest laggards.
  • In Ukraine, negotiations continue in an effort to try to resolve an occupation of state security buildings by pro-Kremlin activists in three eastern cities. The activists have been accused of taking hostages and wiring the buildings with explosives.
  • The International Monetary Fund urged nations to move beyond their dependence on stimulus programs and warned of financial stability risks. The IMF pointed to several perceived risks in the U.S., highlighting high-yield bonds and leveraged loans, where it said underwriting standards had weakened.
  • In international markets, the Hang Seng closed up 1.09% while the Nikkei shed 2.10%. Germany's DAX was up 0.16%, while the FTSE was 0.68% higher.
  • Markets rebounded Tuesday to halt a three-day selloff as investors bought back into trendy tech stocks such as Google (GOOG) and Netflix (NFLX) that have been punished this year.

-- Written by Andrea Tse, Jane Searle and Keris Alison Lahiff in New York

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