Stocks rise then fall on Wall Street after Fed minutes confirm inflation fears

Updated: Chip maker Qualcomm fell 0.9% after rival Broadcom said it was lowering its takeover bid by about $US4 billion.

Stocks rose then fell in the final hours of trading on Wall Street as investors digested the latest corporate news and the release of minutes from the last US Federal Reserve meeting.

At the close in New York, the Dow Jones Industrial Average dropped 166.97 270 80 points, or 0.7%, to 24,797.78 after earlier rising as much as 300 points. The S&P 500 tumbled 0.55% to 2701.33 and the Nasdaq Composite slid 0.2% to 7218.23.

Despite stock-market volatility earlier this month, many investors say robust corporate earnings and strong economic growth should help major stock indexes climb as the year goes on.

“As long as these fundamental factors remain in place, it’s really hard to poke holes in the argument that you should be in a risk-on mode at this point,” says Emily Roland, head of capital markets research at John Hancock Investments.

Stocks fell sharply after the Fed minutes, released mid-afternoon, revealed officials plan to keep gradually raising short-term interest rates this year.

Faster inflation
The minutes showed that officials believed in January that the economy was set to grow faster than when they met at the end of last year, though some remain worried inflation might continue to lag below the central bank’s 2% target. 

"That was enough to send the yield on the 10-year US Treasury note to a fresh four-year high closer to 3% and push stocks lower. The rate ended at 2.943% from 2.895% on Tuesday.

“The second that bonds really started to sell off was what triggered the stock selloff,” says Ian Winer, head of equities trading at Wedbush Securities. “I have to believe if we do in fact get through 3%, it’s going to be a problem, at least in the near term.”

Shares of Advance Auto Parts rose 8.2% after the auto-parts seller topped profit expectations in the most recent quarter.

Dish Network fell 3.1% after it revealed how many Sling TV subscribers it has for the first time as it looks to assure investors it can grow in new businesses while customers continue to drop their traditional television packages.

Broadcom lowers Qualcomm offer
Chip maker Qualcomm fell 0.9% after rival Broadcom said it was lowering its takeover bid by about $US4 billion. The move comes after Qualcomm raised its own bid for NXP Semiconductors on Tuesday in a bid to fight off Broadcom.

Shares of other large internet and technology firms rose after analysts raised their price targets on Alphabet, and Netflix. Gains in those companies lifted the consumer-discretionary and information-technology sectors—the S&P 500’s best performers this year.

The Stoxx Europe 600 inched up 0.2%. France’s CAC 40 closed up 0.2%, Germany’s DAX fell 0.1% and the UK’s FTSE 100 rose 0.5%.

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