US close: Markets higher as Fed signals end to balance sheet reductions
By Josh White
Date: Wednesday 20 Feb 2019
(Sharecast News) - Wall Street finished in the green on Wednesday, as investors mulled over the latest developments in Sino-US trade relations and digested the latest Federal Reserve minutes.
The Dow Jones Industrial Average ended the session up 0.24% at 25,954.44, the S&P 500 added 0.18% to 2,784.70, and the Nasdaq Composite was ahead 0.03% at 7,489.07.
Minutes from the Fed's latest meeting three weeks ago were released during the afternoon, which revealed that officials were keen to end the reduction of bonds on the Fed's balance sheet before the end of the year.
"Almost all participants thought that it would be desirable to announce before too long a plan to stop reducing the Federal Reserve's asset holdings later this year," the minutes read.
"Such an announcement would provide more certainty about the process for completing the normalization of the size of the Federal Reserve's balance sheet."
The Federal Reserve began reducing its bond portfolio in October 2017 by way of a capped roll-off each month.
Investors had recently grown increasingly nervous, however, that the Fed would continue the reduction process to continue even in the face of tightening financial markets.
Sino-US trade relations were also focus again after Donald Trump told reporters at the White House on Tuesday that talks between the two nations were "going very well" and suggested that the 1 March deadline for raising tariffs could be extended.
Trump's latest comment on how trade talks are going well had boosted confidence over negotiations between the two sides concluding on a positive note, Lukman Otunuga, research analyst at FXTM, noted.
"However, with Trump also stating that the talks are 'very complex' and the current March deadline is not a 'magical date', a breakthrough deal is still some distance away.
"A market-friendly outcome this week will be for both sides to agree on extending the 1 March deadline, which should provide more time for finding a middle ground on trade policy."
In corporate news, CVS Health dropped 8.11% by the closing bell, while Garmin surged 17.04% after both reported their earnings earlier in the day.
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