S&P, Nasdaq open at record levels after US Fed minutes show economy to improve

Traders work on the floor of the New York Stock Exchange at the closing bell of the Dow Industrial Average in New York on May 17, 2017.
Traders work on the floor of the New York Stock Exchange at the closing bell of the Dow Industrial Average in New York on May 17, 2017.PHOTO: AFP

NEW YORK (REUTERS) - The S&P 500 and Nasdaq Composite opened at record highs on Thursday after minutes of the Federal Reserve's latest meeting showed policymakers expected the economy to pick up momentum.

While policymakers expected they would raise interest rates sooner rather than later, they agreed they should hold off until it was clear a recent slowdown in the economy was temporary.

Federal funds futures imply traders see an 83 per cent chance of a rate hike in June, unchanged from before the minutes, according to the CME Group's FedWatch tool.

However, the odds of a further increase this year dipped to 46 per cent, from roughly 50 per cent late on Tuesday.

"I think the markets are pretty okay at this point with a June rate hike," said Scott Brown, chief economist at Raymond James in Florida. "The Fed made it pretty clear that the economic slowdown is transitory and as long as the economic data picks up, we should see a rate hike next month. The only hurdle to that could be employment numbers," said Mr Brown, referring to the data for May due next week.

While recent economic data has been mixed, with signs of a dip in consumer sentiment and spending, the job market continues to strengthen.

That was reinforced by the jobless claims data, which showed that claims rose less than expected last week and the four-week moving average of claims fell to a 44-year low.

At 9:37 a.m. ET (9:37 p.m Singapore time) the Dow Jones Industrial Average was up 51.51 points, or 0.25 per cent, at 21,063.93. The S&P 500 was up 4.66 points, or 0.19 per cent, at 2,409.05, easing after hitting a record of 2,409.96.

The Nasdaq Composite was up 16.16 points, or 0.26 per cent, at 6,179.18. The index hit an all-time high of 6,183.02.

Eight of the 11 major S&P 500 sectors were higher, with the consumer discretionary index's 0.55 per cent rise leading the advancers.

Advancing issues outnumbered decliners on the NYSE by 1,693 to 790. On the Nasdaq, 1,408 issues rose and 781 fell.

The S&P 500 index showed 49 new 52-week highs and three new lows, while the Nasdaq recorded 54 new highs and 14 new lows.