While you were sleeping: Wall St ticks higher, China feels Moody's downgrade

Wall Street moved higher as minutes from the latest Federal Reserve meeting, released late in the session, signalled interest rates could increase in June.

Many investors and analysts view rate increases as a vote of confidence in the US economy but some said the central bank’s assessment of growth and the details offered on how it plans to pare its balance sheet suggested officials would continue to move at a gradual pace.

“You’ve got a lot of things stuck in a range because the forces are pretty balanced,” said Russ Koesterich, co-portfolio manager of BlackRock’s Global Allocation Fund, Dow Jones reported.

“The economy’s doing OK, but not taking off. The Fed’s hiking, but doing it gently. And investors are nervous about high valuations and low volatility, but there are few other places to go.”

At the close trading in New York, the Dow Jones Industrial Average rose 74.51 points, or 0.4%, to 21,012.42. The Nasdaq Composite Index also rose 0.4% to 6163.02, while the Standard & Poor's 500 Index gained 0.25% to 2404.39.

Utilities and real estate stocks did best in the S&P 500, rising 0.7% and 0.6% respectively.

The yield on the benchmark 10-year US Treasury note fell to 2.266% from 2.285% on Tuesday.

DuPont rose 1.3% for the biggest gain in the Dow.  

Bunge denies approach
In corporate news, grain trader Bunge said it was not engaged in "business combination discussions" with Glencore. This follows a statement by the latter that it had made an informal approach "regarding a possible consensual business combination," adding that "discussions may or may not materialise and there is no certainty that any transaction will occur."

"Bunge is committed to continuing to execute its global agri-foods strategy and pursuing opportunities for driving growth and value creation," the company said in a statement.

Shares of Bunge traded 0.7% higher after soaring 17% climb on Tuesday.

"It's an acquisition for corporate strategy" rather than synergy, Steve Laveson, a portfolio manager for Becker Capital Management in Portland, Oregon, told Bloomberg. Becker owns more than 630,000 shares of Bunge.

There were disappointments on the earnings front. Shares of Lowe's dropped, down 3.2%, after the home improvement chain reported quarterly earnings that fell short of expectations.

Jewellery retailer Tiffany sank 8.7% after posting a surprise drop in comparable sales. Signet Jewelers was down 7.2% ahead of its earnings report. The two were the biggest losers on the S&P.

Moody's Chinese warning
Chinese stocks sank initially on Wednesday after Moody's cut the country's debt rating - the first such move since 1989.

The rating agency noted the likelihood of a "material rise" in economy-wide debt and expectations that China’s financial strength could erode as a result.

The Shanghai Composite fell as much as 1.3% on Wednesday, before recovering to finish 0.1% firmer.

Moody’s downgrade to A1 from Aa3, puts China on par with Japan.

Meanwhile, a National Association of Realtors report showed existing home sales fell 2.3% to a seasonally adjusted annual rate of 5.57 million units in April, amid "stubbornly low supply levels."

Lawrence Yun, NAR chief economist, said every major region except for the Midwest saw a retreat in existing sales in April.

"Last month's dip in closings was somewhat expected given that there was such a strong sales increase in March at 4.2%, and new and existing inventory is not keeping up with the fast pace homes are coming off the market," he said in the report.

"Demand is easily outstripping supply in most of the country and it's stymieing many prospective buyers from finding a home to purchase."

In Europe, equities were mixed. Germany's DAX Index fell 0.1%, France's CAC40 Index declined 0.2% and the UK's FTSE 100 Index rose 0.4%, with gains led by a 3.3% rally by easyJet.

(BusinessDesk)