Fed meeting notes give stocks boost; tech, retailers rally

The central bank has said it expects to raise rates a total of three times this year.

NEW YORK — U.S. stocks turned higher Wednesday after the Federal Reserve indicated it’s not in a hurry to raise interest rates too quickly. Retailers and technology companies led the way as the market erased some early losses.

Stocks opened lower after a business survey suggested that the eurozone economy might remain weak for longer than experts had expected. Investors bought U.S. and European government bonds, which sent yields and interest rates lower and hurt banks. The S&P 500 index fell as much as 14 points early on.

The market turned higher after the Fed released minutes from its meeting in early May. Officials concluded that the Fed should be on track to keep raising interest rates gradually, and some said it wouldn’t be a problem if inflation briefly went past the Fed’s target rate of 2 percent. That suggests the Fed won’t raise interest rates too quickly, a development that worries investors because it would slow down economic growth.

“Investors are sort of nervous around an overly aggressive Fed at this point in the cycle maybe throwing us into a recession,” said Katie Nixon, chief investment officer for Northern Trust Wealth Management.

Federal Reserve officials left interest rates unchanged in early May and investors expect they will raise them in mid-June. The central bank’s members discussed concerns such as rising wage pressures and possible negative reactions to the Trump administration’s trade policies, but didn’t change their overall views.

The central bank has said it expects to raise rates a total of three times this year and some experts believe it will raise rates as many as four times. Nixon said she expects only two rate increases: she said the Fed might leave rates alone after June if it sees signs the economy is slowing down a bit as the effects of last year’s tax cuts fade.

The IHS Market purchasing managers’ index, a broad gauge of business activity in Europe, fell to its lowest level in 18 months in May. While the European economy is still growing, investors had hoped for signs the doldrums were clearing.

Banks climbed Tuesday before Congress passed a bill that eases some of the regulations passed after the 2008 financial crisis. President Donald Trump is expected to sign it into law. Real estate investment trusts, utilities, and other stocks that pay large dividends rose. Those stocks are often considered alternatives to bonds, and investors who want income often buy them when bond yields decrease.

Benchmark U.S. crude lost 0.5 percent to $71.84 per barrel in New York. Brent crude, used to price international oils, rose 0.3 percent to $79.80 a barrel in London.

The dollar dropped to 110.07 yen from 111.02 yen. The euro fell to $1.698 from $1.1779.