Stocks rise after Fed minutes; Brent falls

Reuters
European Central Bank President Mario Draghi smiles during the bank's monthly news conference in Frankfurt
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European Central Bank (ECB) President Mario Draghi smiles during the bank's monthly news conference …

By Rodrigo Campos

NEW YORK (Reuters) - Stocks rose on Wall Street on Wednesday, lifting a global equities gauge as the Federal Reserve detailed its plan to allow a strengthening economy to fend for itself, while Brent fell as Libyan oil pumps came back online.

Minutes from the most recent Fed meeting showed the U.S. central bank has begun detailing plans to ease the world's largest economy out of an era of loose monetary policy, while its asset purchases will likely end in October.

Stocks on Wall Street traded higher after the release of the minutes and closed near session highs, erasing about half the losses sustained in the previous two sessions.

"The market, after digesting the Fed minutes, came to the conclusion that the bond-buying program ending in October is a sign of economic strength," said Peter Cardillo, chief market economist at Rockwell Global Capital in New York. "So while it was a bit more hawkish, the conclusion is the economy doesn’t need any more crutches."

The Dow Jones industrial average rose 78.99 points or 0.47 percent, to 16,985.61, the S&P 500 gained 9.12 points or 0.46 percent, to 1,972.83 and the Nasdaq Composite added 27.57 points or 0.63 percent, to 4,419.03.

The FTSEuroFirst 300 index of leading European shares was flat on the day and MSCI's global gauge of stocks edged up 0.2 percent. U.S. dollar-denominated Nikkei futures rose 0.6 percent.

European Central Bank President Mario Draghi's speech out of London didn't alter markets much, as he reiterated his message that the ECB is ready to use "unconventional instruments" if needed to support growth.

Brent crude oil hit a one-month low near $108 a barrel after a Libyan oilfield restarted and supply worries faded, while weekly data from the U.S. Energy Information Administration showed U.S. crude stockpiles rose and gasoline demand faltered.

"Gasoline demand didn’t grow as expected and that disappointment is showing in the negative reaction," said Phil Flynn, analyst at Price Futures Group in Chicago.

Brent fell 0.6 percent to $108.26 and U.S. crude lost 1.2 percent, the most since late May, to $102.16.

Forex markets took the lack of surprises in the Fed minutes as maintaining a dovish slant and the U.S. dollar weakened against a basket of currencies while the euro strengthened 0.2 percent versus the greenback.

"The minutes reflect a central bank gaining more confidence in the recovery, and one that is increasingly preoccupied on matters relating to the exit strategy," Eric Green, head of U.S. rates and economic research at TD Securities, said in a note.

"These minutes are incrementally less dovish than prior iterations, but dovish nonetheless."

The benchmark 10-year Treasury note yield was down slightly at 2.5576 percent after the Fed minutes.

Upbeat U.S. employment data last week prompted some economists to predict the Fed would raise interest rates earlier than previously thought, but yields have since fallen.

Gold was up 0.7 percent at $1,328.10 an ounce.

(Additional reporting by Chuck Mikolajczak, Karen Brettell, Anna Louie Sussman and Richard Leong; Editing by James Dalgleish, Meredith Mazzilli and Chris Reese)

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