Stocks were mixed by late afternoon Wednesday as a dovish Federal Reserve boosted the S&P 500 and Nasdaq, while disappointing earnings from Walt Disney (DIS) helped turn the Dow Jones Industrial Average lower.
The S&P 500 was up 0.56%, the Dow was down 0.05%, and the Nasdaq rose 1.1%.
The markets interpreted comments from Fed Chair Janet Yellen to mean a rate hike in March is off the table. Yellen issued the central bank's semiannual monetary policy report to the House Financial Services Committee on Wednesday and will speak to the Senate Banking Committee on Thursday.
In prepared remarks released before her testimony, Yellen said monetary policy was not on a "preset course" and that she expects gradual rate hikes. Yellen noted that lower interest rates and oil prices could offset tighter financial conditions, though noted recent activity in financial markets "have become less supportive to growth."
"As is always the case, the economic outlook is uncertain," said Yellen. "Foreign economic developments, in particular, pose risks to U.S. economic growth," she added, pointing to recent signs of a global slowdown and subsequent market turbulence.
Analysts took that to mean a rate hike next month was likely off the table. The Fed raised rates for the first time in nearly a decade in December.
"Ultimately, Yellen concluded that policy is not on a preset course and must remain data dependent," Societe Generale's Aneta Markowska wrote in a note. "Given the Fed's outlook for the economy the bias remains toward further hikes, but their timing will be highly dependent on financial market developments."
Societe Generale analysts forecast three rate hikes this year, likely to be delivered in June, September, and December.
Disney was the worst performer on the Dow after a worrying decline in profit at its television business. Television profits declined by 6%, driven by a drop in subscribers from ESPN and lower advertising revenue from A&E. Overall profit benefited from the blockbuster release of Star Wars: The Force Awakens last December.
High-momentum tech and health care stocks led broad gains on Wall Street. Amazon (AMZN) , Microsoft (MSFT) and Facebook (FB) were among the best performers in tech, while Gilead Sciences (GILD) , AstraZeneca (AZN) and Medtronic (MDT) led health care. The Technology Select Sector SPDR ETF (XLK) climbed 1.3% and the Health Care Select Sector SPDR ETF (XLV) jumped 2.1%.
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Crude oil lost earlier highs by Wednesday afternoon. Oil had been higher earlier in the day on hopes of production cuts in the Middle East. Iranian Oil Minister Bijan Zangeneh told reporters that the country was open to cooperation with Saudi Arabia to discuss limiting output to address oversupply worries. West Texas Intermediate crude oil was down 0.29% to $27.86 a barrel.
Fitbit (FIT) shares spiked 3.5% after Salesforce (CRM) CEO Marc Benioff disclosed a stake in the fitness tracker company. Benioff owns around 5.3 million shares in Fitbit, roughly a 5.3% stake. Shares have halved their value since the beginning of the year on concerns over sustainable sales growth.
Time Warner (TWX) rose after reporting a better-than-expected fourth quarter and raising its dividend. The media giant earned $1.06 a share, a nickel above estimates, as its HBO and Turner Broadcasting segments drove sales. Time Warner raised its dividend by 15% and authorized a new $5 billion share buyback program.
Anadarko Petroleum (APC) shares were on watch after the oil company slashed its quarterly dividend to 5 cents a share from 27 cents. CEO Al Walker said the reduced dividend was an "appropriate action to take in the current environment."
Deutsche Bank (DB) shares rebounded strongly Wednesday after a report said the bank may buy back some of its own bonds to strengthen its finances. According to reports, the bank could buy back several billion euros worth of its own debt. Shares rose 4.7%.