U.S. stocks closed narrowly mixed on Wednesday, failing to hold record levels, as the Fed minutes mostly confirmed market expectations for a rate hike in the second half of the year. (Tweet This)
"I guess the real factor here is the majority of Fed members don't see any reason to raise rates in June," said Peter Cardillo, chief market economist at Rockwell Global Capital. He called the minutes "neutral."
The major indices rose modestly before pulling back, with the S&P 500 setting a new intraday high of 2,134.72 and the Nasdaq briefly trading above its record close of 5,092.09.
Stocks spent most of the day fluctuating around the flatline. The Dow transports closed down 1.96 percent, hitting a 7-month low, as airline stocks declined. Southwest closed down 9 percent as one of the leading laggards after the company said it expects a decline in passenger revenue per available seat mile for the quarter.
The Fed minutes showed policymakers mostly brushed aside the wobbly start the U.S. economy has had in 2015, attributing the lack of growth to "transitory" factors that will abate soon. Only a few policymakers supported a June rate hike.
"I think the market read this as no rate hike for a while. I don't think the market is correct," said Brad McMillan, chief investment officer at Commonwealth Financial Network. He noted that stock gains were muted and the minutes' use of "meeting-by-meeting" was hawkish to him and could mean a September rate hike.
Treasury yields and the U.S. dollar were little changed from morning levels after the release of the Fed minutes.
"The obsession with this is a little less relevant because the bond market is tightening right in front of everyone's eyes," said Peter Boockvar, chief market analyst at The Lindsey Group.
Investors are also looking ahead to a Friday speech from Fed chief Janet Yellen for possible new clues on when the central bank may start raising interest rates.
Art Hogan, chief market strategist at Wunderlich Securities, said the speech would probably be "more provocative" than the minutes since Yellen's remarks will account for economic reports since the April Fed meeting.
Yellen is scheduled to speak Friday at the Greater Providence Chamber of Commerce Economic Outlook Luncheon at 1 p.m. She is not expected to take questions.
The Federal Reserve Open Market Committee was scheduled to release the minutes from its April meeting at 2 p.m. The statement from that month removed all calendar references to the timing of a short-term interest rate hike.
Chicago Fed President Charles Evans said in Munich on Wednesday that a rate hike is not likely to be appropriate until early 2016, Reuters reported.
The Dow Jones industrial average closed at a record for the second day in a row on Tuesday, ending below and intraday high of 18,351.36 set earlier that session. The S&P ended mildly lower after closing at a record on Monday.
U.S. Treasury yields fell with the 10-year near 2.26 percent, remaining within the 2.2 and 2.3 percent range.
The dollar held gains against the euro, trading at $1.1104.