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Stocks close higher, but Trump CEO backlash caps gains

  • Earlier on Wednesday, the president's Strategic and Policy Forum disbanded.
  • The disbanding came as backlash against Trump grew following remarks he has made following the violent protests in Charlottesville.

U.S. equities closed higher Wednesday but backlash from the business community against President Donald Trump kept gains in check.

The S&P 500 gained just 0.1 percent to close at 2,468.11, with materials outperforming. The index rose as much as 0.4 percent.

The Dow Jones industrial average closed 25.88 points higher at 22,024.87, with Home Depot and United Technologies contributing the most gains. The Nasdaq composite advanced 0.2 percent to 6,345.11 as shares of Apple hit a record high.

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Earlier on Wednesday, the president's Strategic and Policy Forum disbanded. The disbanding came as backlash against Trump grew following remarks he has made following the violent protests in Charlottesville. On Tuesday, Trump appeared to equate torch-bearing white nationalists with the protesters who demonstrated against them.

After news that the forum was being disbanded, Trump tweeted:

"The market is gauging future expectations for the Trump agenda," said Michael Arone, chief investment strategist at State Street Global Advisors. This, coupled with the back-and-forth with North Korea last week, "raises uncertainty about the path of future policies."

"There's just too much uncertainty," Arone said.

Stocks briefly popped after the Federal Reserve released the minutes from its July 26 meeting at 2 p.m. in New York. The minutes showed Fed officials were split over the path of future monetary policy. Some officials preached caution while another raised concern over delaying the normalization process.

Investors largely expect the central bank to start unwinding its massive $4.5 trillion bonds portfolio — which it accrued trying to stem the economic downturn from the financial crisis — in September.

But the market is also split as to whether the Fed will raise rates once more this year. Market expectations for a December rate hike were about 43 percent, according to the CME Group's FedWatch tool.

"I do think there's going to be a rate hike later this year," said Jason Thomas, chief economist at AssetMark. "Nothing has changed. ... But I think the headlines about the officials disagreeing will lower expectations of a rate hike" in the market.

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., November 7, 2016.
Brendan McDermid | Reuters
Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., November 7, 2016.

U.S. Treasury yields traded lower after the minutes' release, with the benchmark 10-year yield trading at 2.234 percent and the two-year yield at 1.33 percent.

Equities have risen sharply this year, with the S&P 500 advancing about 10 percent year to date and hitting record highs. But stocks suffered their second-worst week of the year last week as geopolitical tensions rose.

"Technicals are really coming into play here as the S&P and the Nasdaq trade just above their 50-day moving averages," said Adam Sarhan, chief executive officer of 50 Park Investments. "If they can fight and hold above those levels, then that'd be good for stocks."

Investors also digested weaker-than-expected housing data, as housing starts and permits fell unexpectedly last month.

Stocks ended flat in the previous session, as a drop in retail stocks capped gains. The SPDR S&P Retail exchange-traded fund (XRT) fell 2.7 percent as shares from major retailers dropped following the release of their quarterly results.

But the index rose 1 percent Wednesday as shares of Target climbed on strong quarterly results.

—CNBC's Jacob Pramuk and Patti Domm contributed to this report.