U.S. stocks rallied, with technology shares gaining the most in two months, as minutes from the Federal Reserve’s last meeting eased concern about the timing of future interest-rate increases.
Alcoa Inc. (AA) advanced 3.8 percent after earnings topped estimates and the company forecast that global demand for aluminum will exceed production this year. Facebook Inc. climbed 7.3 percent, the most in the Standard & Poor’s 500 Index, helping to extend a rebound in technology stocks after a selloff. Regeneron Pharmaceuticals Inc. surged 6.9 percent as shares of biotechnology companies rallied the most in a year.
The S&P 500 gained 1.1 percent to 1,872.18 at 4 p.m. in New York, after the gauge yesterday snapped a three-day slide. The Nasdaq 100 Index climbed 1.8 percent, the most since Feb. 7, after a 0.9 percent advance yesterday. The Dow Jones Industrial Average increased 181.04 points, or 1.1 percent, to 16,437.18. About 6.3 billion shares changed hands on U.S. exchanges, 9 percent lower than the three-month average.
“These minutes are calming for the markets,” Jeffrey Kleintop, chief market strategist at LPL Financial LLC, which manages about $414 billion, said by phone from Boston. “It was clearly stated that the projections overstated the likely shift in rates. A slower pace of interest rates seems more likely here than from the statements.”
Several Fed policy makers said a rise in their median projection for the main interest rate exaggerated the likely speed of tightening, according to minutes of their March 18-19 meeting released today.
Treasury yields rose last month after policy makers predicted that the benchmark interest rate would rise faster than previously forecast. Janet Yellen, presiding over her first meeting as chair, later downplayed the importance of the forecasts, even as she said that rates might start to rise “around six months” after the Fed ends its bond-purchase program.
The Fed reduced the monthly pace of purchases by $10 billion, to $55 billion, and repeated it is likely to continue paring the program in “further measured steps.” Three rounds of bond purchases from the Fed have helped fuel economic growth, sending the S&P 500 surging as much as 180 percent from its 2009 low.
Data last week boosted optimism that the economy is shaking off the effects of severe winter weather and building momentum into the second quarter. The government’s jobs report on April 4 showed employers boosted payrolls last month and the unemployment rate held at 6.7 percent.
The S&P 500 rose 0.4 percent yesterday and the Nasdaq 100 rebounded from its worst three-day drop since 2011 as technology shares rallied after a selloff. The S&P 500 fell as much as 2.4 percent from a record high reached April 2 amid concern about valuations in technology stocks.
Stocks rallied before the Fed minutes today as technology stocks continued to recover and Alcoa’s results boosted optimism at the start of earnings season.
Investors will be watching financial reports for signs of how well corporations weathered the first quarter. Profit for members of the S&P 500 probably climbed 1 percent in the first quarter, analysts now forecast, after anticipating a 6.6 percent rise in January. Their sales climbed 2.9 percent, the projections show.
Alcoa, the first company in the S&P 500 to report results for the quarter, climbed 3.8 percent to $13. The largest U.S. aluminum producer posted profit excluding restructuring costs and other items that beat analysts’ estimates.
The company also forecast global aluminum demand will exceed production this year, predicting an end to an almost decade-long surplus driven by Chinese output that has saddled the industry with lower prices.
JPMorgan Chase & Co. and Wells Fargo & Co. are among the S&P 500 companies that report their earnings on Friday.