Dow posts 4-day winning streak as Fed meeting minutes confirm patience on rate hikes

Navigating the big market risks
Navigating the big market risks

Stocks rose in another volatile session on Wednesday after a summary of the Federal Reserve's meeting in December reiterated comments from the central bank's chairman from last week about patience regarding monetary policy.

The Dow Jones Industrial Average rose 91.67 points to close at 23,879.12, posting its fourth straight day of gains. The advanced 0.4 percent to 2,584.96 — notching a four-day winning streak, which was its longest since September — as the tech and energy sectors outperformed. The Nasdaq Composite climbed 0.87 percent to 6,957.08 as Apple gained 1.7 percent. Energy gained 1.5 percent as a sector, boosted by a 5.2 percent in U.S. crude prices. 

Equities pared gains in the last hour of trading as it appeared a meeting over the shutdown between President Donald Trump and Democratic leadership did not go well. The president tweeted the meeting was "a total waste of time." Sen. Chuck Schumer said the president walked out of the meeting.

Peter Boockvar, Bleakley Advisory Group chief investment strategist, said the president's tweet had a slight negative impact on the market. The market "hasn't cared at all up to this point. I don't know whether today is going to all of a sudden make them care. the market has gone straight up for a week. Up to this point they haven't cared, and both sides dug in. I don't think the market believes it's going to have much of an impact," Boockvar said.

The Fed minutes pointed to a backdrop of low inflation in the U.S., meaning the central bank can "afford to be patient about further policy firming." They also indicated that some Fed officials think a "relatively limited amount" of rate hikes may be coming.

"All the minutes are doing is confirming what they had already hinted at," said Larry McDonald, editor of The Bear Traps Report. "The Fed speak before the minutes was like a fire hose to calm down the markets."

The minutes come after Fed Chairman Jerome Powell said last week the Fed would be "patient" with rising rates.

Investors also weighed the latest developments surrounding U.S.-China trade talks. Discussions over trade between mid-level officials from Washington and Beijing concluded on Wednesday. U.S. Under Secretary of Agriculture for Trade and Foreign Agricultural Affairs Ted McKinney said earlier on Wednesday that he thought negotiations "went just fine." He added: "It's been a good one for us."

Caterpillar rose 0.4 percent while Boeing gained nearly 1 percent. These stocks are largely seen as a bellwethers for trade because of the companies' exposure to overseas markets.

President Donald Trump and China's President Xi Jinping meet business leaders at the Great Hall of the People in Beijing, China, November 9, 2017.
Damir Sagolj | Reuters

U.S. trade officials said in a statement they will report back to the White House for further guidance on the talks.

The meetings this week were the first between U.S. and China officials since President Donald Trump and Chinese President Xi Jinping agreed to a 90-day truce in December to the two countries' ongoing trade war. Both countries have been engaged in a tense sparring of tariffs, targeting billions of dollars' worth of imports in each other's economies with levies.

Ed Yardeni, president and CIO of Yardeni Research, said China could move quickly to strike a deal with the U.S. to avoid further economic pain.

"Lately, it seems to have gotten so bad for China domestically that it may have no choice but to make a trade deal in favor of the US, which could be a boon to US and global equity markets," Yardeni said in a note. "More evidence recently has confirmed my earlier hypothesis about China's weakness," he added, citing Apple's quarterly revenue warning from last week as well as deteriorating leading indicators like purchasing managers' indexes.

The recent tone shift around U.S.-China trade talks has helped boost stocks recently. On Tuesday, the Dow notched its first three-day winning streak since late November. Meanwhile, the S&P 500 and Nasdaq have rallied more than 10 percent since Dec. 24.

However, investors also kept an eye on the ongoing government shutdown. Ratings agency Fitch warned Wednesday it may cut the U.S.' triple-A rating if the shutdown continues.

President Donald Trump delivered an address on immigration and border security Tuesday night, where he made his case for the proposed wall along the U.S.-Mexico border, a key sticking point inhibiting progress toward a funding deal to re-open the government.

"I think things are going to be relatively choppy, but everybody had gotten so negative on the market, specifically a lot of the FAANG names," said Dave Lutz, head of ETF trading at JonesTrading. "But we're all headline-trading right now. If anyone told you what's going to happen a few months from now, they're making stuff up."

—CNBC's Ryan Browne and Patti Domm contributed to this report.