Markets have been under pressure ahead of the Fed's two-day meeting next Tuesday as investors process the likelihood the Federal Reserve will raise rates sooner than later. Wall Street is preparing for the Fed to remove its "patient" language from its press release, a signal that could mean a mid-summer rate hike.
"A degree of it is just anxiety around change," said U.S. Bank Wealth Management's Eric Wiegand on market jitters ahead of next week's meeting. "Investors have become very accustomed to the absolute level of support that they're getting from monetary policy... They're still concerned that rate increases will be either premature or of a magnitude that will have an adverse impact on economic activity."
After two days in the red, the S&P 500 and Dow Jones Industrial Average rebounded in their best session since February 3. The S&P 500 added 1.3% and the Dow climbed 1.5%, or 260 points.
The Nasdaq gained 0.89%, though gains were limited as Intel (INTC) sold off. The chip company slashed first-quarter revenue guidance to $12.3 billion to $13.3 billion, below previous forecasts of $13.2 billion to $14.2 billion, citing "weaker-than-expected demand for business desktop PCs." Shares were down 4.6%.
The financial sector rose after passing round two of the Federal Reserve's stress tests largely unscathed. Citigroup (C) and Morgan Stanley (MS) were among the biggest winners after reporting better-than-forecast buyback programs. Gains at Bank of America (BAC) were limited after the bank was told to resubmit its capital plan. The Select Sector Financial SPDR ETF (XLF) jumped 2.1%.
Crude oil resumed its slide and touched a 6-year low on Thursday, which dragged on the energy sector. West Texas Intermediate was down 2.3% to $47.05 a barrel, while the Energy Select Sector SPDR ETF (XLE) fell 0.64%.
The U.S. dollar saw a reprieve from its two-day rally that sent it to 12-year highs against other currencies. The greenback slipped 0.6% against the euro, 1.2% against the Aussie dollar, and 0.37% against the Swiss franc.
U.S. retail sales slumped 0.6% in February after a 0.8% drop a month earlier and a 0.9% decrease in December. Economists had expected a 0.3% increase as savings in gas prices translated to higher consumer spending. Core retail sales, excluding auto and gas, dropped 0.8%.
"While disappointing, much of the weakness in February retail sales likely reflected the effect of extreme winter weather that may have kept shoppers at home in the month," said RBC Economics economist Nathan Janzen. If "this is the case, the slowing reflects delayed rather than lost sales, with a likely rebound in March provided that temperatures warm closer to seasonal normals."
Lumber Liquidators (LL) jumped 10.2% after CEO Rob Lynch assured investors the company's products were safe, despite a damning report from 60 Minutes earlier in the month.
Dow component United Technologies (UTX) spiked 2.5%. The aerospace company is considering splitting off its Sikorsky Aircraft helicopter unit, The Wall Street Journal reported. The unit had 2014 revenue of $6.6 billion.
Dollar General (DG) added 4% after meeting fourth-quarter expectations. Same-store sales jumped 4.9% over the quarter. Full-year sales growth was expected to increase 8% to 9% with EPS growth of 10% to 13%.
Acadia Pharmaceuticals (ACAD) tanked 22.1% after announcing it will postpone its Nuplazid drug application to the second half of the year. The company had previously expected to file for the Parkinson's disease drug in the first quarter.