Stocks hold on to firm gains following June FOMC minutes.
U.S. stocks rose sharply on Thursday, with the Dow Jones Industrial Average (NYSEARCA:DIA) adding over 180 points after the minutes of the Federal Reserve’s June policy meeting showed strong support for gradual interest rate increases.
Dow industrials gained 181.92 points, or 0.8%, to close at 24,356.74. Twenty-eight of 30 index members finished higher.
The broader S&P 500 Index (NYSEARCA:SPY) jumped 0.9% to close at 2,736.61. Ten of 11 primary sectors recorded gains.
Meanwhile, the technology-driven Nasdaq Composite Index (NYSEARCA:QQQ) rose 1.1% to finish at 7,586.43.
A measure of implied volatility known as the CBOE VIX (NYSEARCA:VXX) declined sharply on Thursday, a sign that optimism had returned to Wall Street for the time being. The so-called “fear index” fell 7.3% to close at 14.97, on a scale of 1-100 where 20 represents the historic average.
The minutes of the June Federal Open Market Committee (FOMC) revealed that policymakers saw negative risks from U.S. trade policy. In particular, policymakers said trade risks “had intensified” and that a tit-for-tat tariff war could have negative effects on the economy.
Nevertheless, FOMC members maintained their hawkish outlook on interest rates, with the consensus being that monetary policy will tighten gradually to reflect a strengthening economy.
The Final Word: The Fed remains on track to raise interest rates two more times this year. However, officials are keeping a close watch of President Trump’s protectionist policies, which have so far been met with criticism on both sides of the political aisle.