U.S. stocks climbed Wednesday, recouping a chuck of the prior two-day drop, after minutes from the Federal Reserve's last meeting noted an improving economy and labor market, while setting the stage for the central bank's eventual exit from its course of monetary easing.
The Federal Open Market Committee on Wednesday afternoon released minutes from its two-day gathering in June, at which the central bank reduced monthly bond purchases to $35 billion. The minutes pointed to the likely end of the asset-buying program also known as quantitative easing, or QE, in October.
"Their assessment of the economy, we think, is that the economy can now take its training wheels off, that there is now some degree of sustainable momentum where we can talk about" removing accommodation, said Jim Russell, senior equity strategist for US Bank Wealth Management, who noted the minutes were taken before the surprisingly strong June payrolls report.
"It's pretty clear the Fed is serious about ending its program, likely in October. At this point the conversation should entirely focus on the exit strategy," said Dan Greenhaus, chief global strategist at BTIG.
"The end of QE sounds like it's right on schedule, we got a reaffirmation of what we think the path of monetary policy will be," said Art Hogan, market strategist at Wunderlich Securities.
Wall Street had risen ahead of the Fed minutes as Alcoa's quarterly profit bolstered optimism about the second-quarter earnings season, which gets under way in earnest next week.
"We got off to a good start with Alcoa, it just helps psychologically," said Jim Dunigan, managing executive, investments, at PNC Wealth Management.
Alcoa's earnings "really did benefit from improved industrial demand for its engineered products, as well as increased sales to the auto and aerospace industries," said Chris Muir, equity analyst at S&P Capital IQ.