U.S. Stocks Rise as Investors Continue to Respond to Fed’s Plan to Trim Balance Sheet

U.S. equities rallied on Thursday as investors continued to show a positive reception to the Federal Reserve’s plan to trim its balance sheet.

The Minutes from the Fed’s May 3 meeting released on Wednesday said the Fed has devised a system where it will announce cap limits on how much it will allow to roll off each month without reinvesting. The market spiked higher on the news after the initial announcement and the buying carried over into Thursday’s session. This is a strong indication that investors feel the plan to unwind the balance sheet is positive.

In the cash market, the blue chip Dow Jones Industrial Average settled at 21082.95, up 70.53 or +0.34%. The benchmark S&P 500 Index closed the session at 2415.07, up 10.68 or +0.44% and the tech-based NASDAQ Composite ended the day at 6206.87, up 43.85 or +0.71%.

The blue chip Dow Jones Industrial Average finished within striking distance of its all-time high, led by strong performances by UnitedHealth and 3M

The benchmark S&P 500 posted a new record high and a new record close on Thursday. It was primary boosted by information technology.

The technology-based NASDAQ Composite also recorded a new all-time high and close. It was driven higher by the FANGs – Facebook, Amazon, Netflix, and Google. Amazon was breathing on $1000 per share on the close.

U.S. Economic News

In the U.S., Weekly Unemployment Claims came in at 234K, rising slightly from last week’s 233K read. Investors were looking for a read of 238K.

The U.S. Goods Trade Balance came in at minus 67.6 Billion. This was lower than the expected 64.7 Billion and the previous 65.1 Billion.

Preliminary Wholesale Inventories were down 0.3%. This was better than the 0.2% forecast and the revised 0.1% posted last month.

Fed News

On Thursday, Federal Reserve Governor Lael Brainard said that a brighter global economy is posing less risk to the Fed’s outlook for the U.S.

“The global economy is brighter than it has been for the last few years,” Brainard said at a panel at the Center for Global Development.

Her comments seemed to reiterate the signal sent by the Fed in its May meeting minutes that the central bank is likely to move forward with an expected rate increase in June.

In the minutes, the central bank seemed to be implying that global risks were receding after years in which volatility in China, collapsing oil prices and slow growth in Europe slowed the Fed from planned rate increases.