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The Dow crossed the psychological 22,000 milestone for the fourth time this year on Wednesday, rebounding from the lows it hit the last week due to rhetoric between Pyongyang and Washington. These gains were broad based and incurred after the release of minutes from the Fed’s policy meeting last month. The minutes clearly indicated that Fed officials remain divided in their opinions to increase the interest rates. S&P 500 gained as the materials outperformed and Nasdaq ended in the green due to a rise in the shares of Apple. However, gains were pared after the Trump administration disbanded the Manufacturing Council and Strategic and Policy Forum following a backlash from the top corporate leaders which grew stronger.

The Dow Jones Industrial Average (DJIA) closed at 22,024.87, advancing 0.1% or 25.88 points. The S&P 500 Index (INX) increased 0.1%, or 3.5 points to close at 2,468.11. Meanwhile, the Nasdaq Composite Index (IXIC) closed at 6,345.11, increasing 12.10 points or 0.2%. A total of around 5.8 billion shares were traded on Wednesday, below the last 20-session average of 6.3 billion shares. Advancing issues outnumbered decliners on the NYSE by 1.52-to-1 ratio. On the Nasdaq, advancers outnumbered decliners by a 1.23-to-1 ratio.

Fed Minutes Indicate Divide over Inflation

The Dow managed to finish above the psychological 22,000 milestone for the fourth time this year, rebounding after a short lull. Such gains were possibly attributable to the release of July’s Fed policy meeting minutes. The minutes indicated that low inflation rates continue to worry a section of the central bank, The Fed’s favored gauge of inflation, core PCE inflation, came in at 1.5% for the month of June, well below the targeted level of 2%.  Consequently, Fed officials remain divided about the path of interest rate hikes. This came as welcome news for investors i, leading to gains for the Dow.

However, the Central Bank is eager on unwinding its $4.5 trillion balance sheet. The minutes also revealed that more than half the Fed officials wanted to wait till the next monetary meeting to release details about the planned unwinding of the humungous bond portfolio that the central bank has built up. This safely puts investors in a position to assume that the procedure might start in September, the time around which the Fed next meets.

S&P 500, Nasdaq Rebound

The Nasdaq closed higher on Wednesday after shares of Apple (AAPL - Free Report) notched up a record high due to broadly encouraging economic conditions. Currently, the tech-laden index is trading above it 50-day moving average indicating a healthy performance for the tech sector.

The S&P 500 closed higher as well and nine of its eleven primary sectors ended in the green, led by materials. The Materials Select Sector SPDR (XLB) gained almost 1%. Gains for the S&P 500 were mostly broad based. The index has surged 10% year to date and is notching record highs regularly. Tech shares have shown strong performances and just like the Nasdaq, the S&P 500 is also trading just above the 50-day moving average. This comes just after the stocks posted their second worst weekly performance for 2017. Markets have somewhat stabilized as the geopolitical tensions have subsided.

Trump Disbands Advisory Panels, Markets pare Gains

The business community’s backlash against President Trump continued a reaction to his speech at the White Nationalist Rally in Virginia which turned violent. Such a sentiment led to several top CEOs stepping down from the Manufacturing Council.

As a result, the President disbanded the Manufacturing Council as well as the Strategic and Policy Forum,. This decision is weighing on investors since it raises questions on Trump’s ability to deliver on his pro-business growth agenda. The tax and regulatory reforms, a part of the President’s economic agenda now seems a farfetched dream. Moreover, the geopolitical tension due to frequent rhetoric against North Korea has only raised levels of uncertainty.

Economic Data

The data for Housing Starts for the month of July fell 5.6% to 1,155,000 whereas the consensus estimated it to increase to 1,224,000. The data for building permits also showed a decline of 3.2% to 1,223,000 whereas the consensus estimated it to decrease to 1,263,000 from the previous month. Such events did not have an impact on the overall markets.

Stocks That Made Headlines

Union Pacific Aims Greater Efficiency With 750 Layoffs

In a bid to increase efficiency for utilization of its resources in a better manner, Union Pacific Corporation (UNP - Free Report) announced in a filing with the U.S. Securities and Exchange Commission (SEC) that it intends to trim its workforce.  (Read More)

United Rentals to Acquire Neff Corp for $1.3 Billion

United Rentals, Inc. (URI - Free Report) , the largest equipment rental company in the world, has agreed to acquire Neff Corporation or Neff, one of the 10 largest U.S. equipment rental companies.(Read More)

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