Wednesday was shaping up to be a solid session for the stock market, that is, until the minutes from the late-April Fed meeting were released at 2 p.m. ET.
The minutes showed that committee members weren’t averse to a rate hike in June if economic data continues to be strong. At the start of the week, the odds of a rate hike at the June meeting, according to CME Group FedWatch, were 4%. Now they’re at 34%. The 10-year Treasury yield spiked on the news, rising 10 basis points to 1.87%.
The Nasdaq halved a 1% intraday gain, rising 0.5%. The Dow Jones industrial average and S&P 500 were mostly unchanged.
Preliminary data showed volume on the Nasdaq coming in slightly higher than Tuesday’s levels. NYSE volume fell. On the NYSE, declining stocks outnumbered advancers by more than 2-to-1. It was the other way around on the Nasdaq, with winners topping losers by a small margin.
After the close, Salesforce.com (CRM) jumped 5.5% in after-hours trading after the enterprise software maker reported strong earnings. Tesla (TSLA) was under pressure, though, on news of a share offering. Shares of Tesla jumped 3% in the regular session after Goldman Sachs upgraded shares to buy from neutral, citing valuation.
In the stock market today, financials outperformed on growing expectations for a Fed rate hike. In the ETF space, SPDR S&P Bank (KBE) and SPDR S&P Regional Banking (KRE) outperformed, rising around 4% each, but both are still trading near their 200-day moving average lines after getting resistance there last month.
Retailer Lowe’s (LOW) cleared a base in heavy volume, rising 3%, after reporting strong earnings before the open. Lowe’s price action was much different than Home Depot‘s (HD), which slumped 2.5% Tuesday on similarly strong results.
But the news wasn’t so good at Target (TGT). Shares gapped down and lost 8%. A bigger-than-expected 5% decline in fiscal Q1 sales trumped a better-than-expected 17% increase in profit.