NEW YORK — New signs that interest rates may be heading higher sent stocks flitting between gains and losses Wednesday, but the major indexes ended up closing pretty much where they started.
Stocks held onto gains through the first part of the day, but in the afternoon the Federal Reserve released minutes of its last meeting suggesting it was more open to raising rates than many had thought. Caught unaware, investors started dumping utilities and other high dividend payers that had been in favor for much of the year.
Bond prices fell sharply, sending long-term interest rates higher.
By the close, the Standard and Poor’s 500 index managed to eke out a gain, up 0.42 points, just 0.02 percent higher, to 2,047.63. The Dow Jones industrial average slipped 3.36 points, less 0.1 percent, to 17,526.62. The Nasdaq composite climbed 23.39 points, or 0.5 percent, to 4,739.12.
Utilities fell 1.9 percent on the Fed news, but banks rose because they can make more money on loans if rates go higher. JPMorgan Chase jumped 4 percent and Goldman Sachs climbed 3 percent.
“The Fed is clearly in the driver’s seat” of the stock market, said Ernie Cecilia, chief investment officer of Bryn Mawr Trust. It’s impacting prices “more than any other kind of input out there.”
The minutes of the Fed’s last meeting showed a widely held view among policymakers that it “likely would be appropriate” to raise rates at its June meeting as long as the economy and labor markets continue to strengthen and inflation shows signs of accelerating.
Some investors are worried that a rise in rates will hurt a sluggish U.S. economy that grew just 0.5 percent in the first quarter.
“There is little room for error,” said Tom Cassidy, chief investment officer at Univest Wealth Management Division. “When you’re growing slowly, any hiccup could result in a recession.”
Among stocks making big moves, Target plunged $5.61, or 7.6 percent, to $68 after reporting that sales had slowed. The company also gave a forecast that disappointed investors.
Shares of many other retailers followed the company lower in what is shaping up to be a miserable year for the sector. Wal-Mart dropped $1.95, or 3 percent, to $63.15 and Costco Wholesale lost $2.31, or 1.6 percent, to $141.29.
