Wall Street ended the session mostly higher on Wednesday, July 5, in a busy return from the Independence Day break.
The S&P 500 was up 0.15% and the Nasdaq added 0.67%. The Dow Jones Industrial Average declined slightly, by 0.01%.
Federal Reserve minutes reaffirmed the central bank's confidence in the U.S. economy's ability to withstand further tightening. According to the minutes, "several" Fed members back an unwinding of its balance sheet within a "couple of months." Fed members had previously said that the central bank could begin to unwind the $4.5 trillion in bonds it holds on its balance sheet as early as this year, and private economists have suggested it may start in October.
"Even though the Fed is intent to begin tapering soon, the road to a normalized balance sheet may be long with many pitstops on the way," said Mike Loewengar,E*TRADE VP of investment strategy. "As is the case with many Fed actions, timing is everything."
Members also indicated a willingness to continue increasing interest rates at coming meetings even with recent softening inflation trends. The Fed has said it sees recent inflation weakness as transitory.
"Most participants viewed the recent softness in these price data as largely reflecting idiosyncratic factors, including sharp declines in prices of wireless telephone services and prescription drugs, and expected these developments to have little bearing on inflation over the medium run," according to the minutes.
The Federal Open Market Committee, the monetary policy arm of the U.S. central bank, raised interest rates by 25 basis points at its June 13-14 meeting, setting the target range at 1% to 1.25%. The increase was the Fed's second of the year and was taken as a vote of confidence in the U.S. economic recovery and future pace of growth.
Fed officials also telegraphed one more rate hike this year and three in 2018. Fed Chair Janet Yellen gave projections of median short-term rates as 1.4% at the end of this year; 2.1% at the end of 2018; and 2.9% at the end of 2019.
Gains in major indexes were also supported by tech stocks: The FAANG stocks -- Facebook Inc. (FB - Get Report) , Amazon.com Inc. (AMZN - Get Report) , Apple Inc. (AAPL - Get Report) , Netflix Inc. (NFLX - Get Report) , and Alphabet Inc. (GOOGL - Get Report) -- rose, while the Technology Select Sector SPDR ETF (XLK - Get Report) added nearly 1%.
Crude oil prices were lower on Wednesday after Russia knocked down the chances of further cuts among the Organization of Petroleum Exporting Countries. Four government officials have ruled out deeper output reductions as a proposal when the group meets later in July, according to Bloomberg. OPEC and non-OPEC countries, including Russia, agreed in May to extend a production-cut agreement through March 2018.
Investors also awaited delayed data on domestic inventories. Weekly stockpiles data from the Energy Information Administration have been pushed back a day because of the July 4 holiday and will be released on Thursday, July 6, at 10:30 a.m. ET.
West Texas Intermediate crude slid 4.1% to $45.13 a barrel on Wednesday, its largest one-day decline in one month. Energy stocks were the worst performers in U.S. markets. Major oil producers Exxon Mobil Corp. (XOM - Get Report) , Schlumberger Ltd. (SLB - Get Report) , Chevron Corp. (CVX - Get Report) , and Halliburton Co. (HAL - Get Report) were lower, while the Energy Select Sector SPDR ETF (XLE - Get Report) declined 2%. Chevron and Exxon were among the biggest decliners on the Dow Jones.
Factory orders in the U.S. declined by 0.8% in May, according to the Census Bureau. The drop was slightly steeper than an anticipated 0.7% decline. New orders for manufactured goods have dropped for two months in a row. The measure decreased by 0.3% in April.
Overseas, escalating tensions in Asia provided another check on Wall Street's momentum. North Korea said Wednesday that its intercontinental ballistic missile, fired into Japan's Exclusive Economic Zone early Tuesday, is able to carry a large nuclear warhead. The U.S. Defense Department believes the missile could reach as far as Alaska and possibly other parts of the North American mainland.
In response, U.S. Secretary of State Rex Tillerson called the missile firing a "new escalation of threat," and the U.S. has called for an emergency meeting of the U.N. Security Council. The missile firing comes days before of a meeting of G20 leaders where a discussion of the proliferation of weapons in Pyongyang will be on the agenda.
General Motors Co. (GM - Get Report) moved lower even after the automaker said sales in China had bounced back in June following two months of decline. GM reported sales of 285,191 vehicles in the region in June, 4.3% higher than the same month a year earlier. For the first six months of the year, sales fell 2.5%. The automaker is the second-largest maker of foreign vehicles in China.
GM also announced that it would introduce 10 new or updated models to the Chinese market in the next six months.
"We are pleased with the strong demand across our brands in June," regional chief Matt Tsien said in a statement. "Over the next six months, we will be launching 10 new and refreshed models to build on our momentum."
U.S.-based Vantiv Inc. (VNTV) announced plans to purchase U.K. company Worldpay Group plc (WPG - Get Report) in a deal worth $10 billion. JPMorgan Chase & Co. (JPM - Get Report) , which had also expressed interest in an acquisition, said afterward it didn't intend to bid.
"The potential merger creates a scale world-class payments group in a dynamic market, with deep payments capabilities, product and vertical expertise and strong distribution channels," the companies said.
Baidu Inc. (BIDU - Get Report) and Nvidia Corp. (NVDA - Get Report) were higher after partnering to develop artificial intelligence technology. Baidu will rely on Nvidia chips for its cloud and self-driving car technology.
Advanced Micro Devices Inc. (AMD - Get Report) joined other chipmakers in gains after the Semiconductor Industry Association posted positive data for the industry. The group reported a 22.6% increase in global chip sales in May, its largest year-over-year increase since September 2010.
Tesla Inc. (TSLA - Get Report) shares slipped 7% on the news that its second-quarter deliveries fell short of Wall Street estimates by 8%. The company said on Tuesday, July 4, that it delivered 22,000 cars in the second quarter, including about 12,000 of the Model S and about 10,000 of its Model X SUV. Wall Street had expected the company to deliver about 24,000 in the quarter.
Oracle Corp. (ORCL - Get Report) was slightly higher on Wednesday after being upgraded to overweight from sector weight at KeyBanc. Analysts are confident in the company's ability to sell existing customers on its cloud services.
Don't miss these top stories from TheStreet:
- Volvo Isn't the Only Car Maker Who Isn't Keen on Gasoline
- This Is Why the Federal Reserve Isn't Likely to Spark Another 'Taper Tantrum'
- Alpha Rising: Meet The Children's Place CEO Jane Elfers
- We Should All Thank Goldman Sachs For Saying Tesla's Stock Is Going to Crash
- Brutal News for Tesla: Goldman Predicts the Stock Will Get Slashed in Half
- Tesla Remains a Battleground Stock, Jim Cramer Says
- 10 Troubled Retailers Besides J.C. Penney That Are Shuttering Stores
Visit here for more of the latest business headlines.