Stocks Jump Ahead of Fed Minutes

The stock market continues its on-step forward/one-step back pattern of trading today, with major indexes all heading higher following yesterday’s losses as the market waits for the release of the Fed minutes. Goldman Sachs (GS) and United Technologies (UTX) have led blue chips higher, while Tiffany (TIF), TJX (TJX) and Netflix (NFLX) have been the big gainers among large-company stocks.

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The Dow Jones Industrial Average has gained 133.76 points, or 0.8%, to 16,508.07 at 12:59 p.m., while the S&P 500 has risen 0.6% to 1,883.88. The Nasdaq Composite has advanced 0.6% to 4,119.52 and the small-company Russell 2000 has ticked up 0.1% to 1,098.97. The 10-year Treasury yield has ticked up to 2.54%.

Goldman Sachs has gained 1.5% to $158.76 after announcing that it would seek sell its commodity warehousing business.

United Technologies has advanced 1.3% to $114.51 bouncing back from yesterday’s 1.7% drop, which came despite announcing a big backlog of orders at its Pratt & Whitney unit.

Tiffany has surge 8.6% to $95.78 after announcing higher-than-forecast earnings and raising guidance. “Tiffany, consistent with our thesis, is seeing success in new product execution, & gross-margin upside on favorable product costs, price increases, & sales leverage,” notes Citigroup’s Oliver Chen.

TJX has risen 3.3% to $55.72 after it was upgraded to Buy from Neutral at SunTrust Robinson Humphrey.

Netflix has climbed 3.4% to $384.43 after it said it would launch in six European countries, including France and Germany.

The market doesn’t seem to be waiting on the Fed, as buying ahead of it. Citigroup’s Richard Cochinos and Bryan Zarnett don’t expect the minutes to reveal the Fed’s hawkish side:

A number of sell-side notes have raised the possibility the FOMC could discuss balance sheet adjustments and exit plans for the post-QE period in the minutes today, giving them a distinctly hawkish tone. Fed discussing exit strategies would be well ahead of its current signaling, and would be a deviation from the majority of language we've heard since the last policy meeting. We think economist expectations may be a touch optimistic. Taking a collection of Fed speeches since 30 April as a way to "now-cast" expectations, the rhetoric on balance remains quite accommodative (Dudley yesterday was a perfect example). It's unlikely the Board would be discussing exit strategies at length when they've been primarily focused on a bifurcating recovery (poor housing, mixed demand, better labor markets). As of the last meeting, Q1 GDP was already released so the mixed US data since then would hardly come as a shock. On balance, we expect the rhetoric to be cautiously optimistic.

This post has been updated.