May 23, 2018 / 1:15 PM / a year ago

S&P 500 erases losses following Fed minutes

Traders work on the floor of the New York Stock Exchange (NYSE) shortly after the opening bell in New York, NY, U.S. December 14, 2016. REUTERS/Lucas Jackson/Files

(Reuters) - The S&P 500 erased losses to trade little changed on Wednesday after minutes from the last Federal Reserve meeting suggested higher inflation may not result in faster interest rate hikes.

Most Fed policymakers thought it likely another interest rate increase would be warranted “soon” if the U.S. economic outlook remains intact, and that many participants saw little evidence of general overheating of the labour market, minutes of the central bank’s last policy meeting showed.

“The market is probably breathing a little bit of a sigh of relief knowing that inflation even a bit above two percent may not necessarily mean a faster rate of increases,” said Mike Baele, managing director at U.S. Bank Private Client Wealth Management in Portland, Oregon.

The central bank has lifted borrowing costs once so far this year, in March, and policymakers are currently about evenly split between those who expect two more rate rises this year and those who anticipate three. Investors overwhelmingly expect a rate rise at the next meeting on June 12-13.

Shares of rate-sensitive utilities .SPLRCU and real estate .SPLRCR gained following the release of the minutes, leading percentage gains among sectors.

At 2:36 p.m. ET, the Dow Jones Industrial Average .DJI fell 60.9 points, or 0.25 percent, to 24,773.51, the S&P 500 .SPX lost 2.04 points, or 0.07 percent, to 2,722.4 and the Nasdaq Composite .IXIC added 13.82 points, or 0.19 percent, to 7,392.28.

Tiffany (TIF.N) surged 21.8 percent after the jeweller’s quarterly results blew past estimates and the company raised its full-year profit forecast and announced a $1 billion buyback programme.

Declining issues outnumbered advancing ones on the NYSE by a 1.09-to-1 ratio; on Nasdaq, a 1.05-to-1 ratio favoured decliners.

The S&P 500 posted 6 new 52-week highs and 3 new lows; the Nasdaq Composite recorded 70 new highs and 38 new lows.

Additional reporting by Chuck Mikolajczak in New York and Medha Singh in Bengaluru; Editing by Sriraj Kalluvila and Nick Zieminski

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