US markets closed higher reacting to Fed minutes and surge in crude

The US market closed higher on Wednesday, boosted by soaring oil prices, while minutes from the Federal Reserve’s latest policy meeting signaled reluctance to raise rates as early as this month. A jump in oil prices sent shares of energy companies’ sharply higher, boosting indexes in early trade. Oil prices soared 5.2%, to close at $37.75 a barrel after a surprise drop in inventories. The Energy Information Administration reported US crude supplies in storage fell by 4.9 million barrels in the week ended April 1. Minutes from the March 15-16 meeting showed several officials argued against an interest-rate increase in April, saying such move would signal too much urgency they didn’t think appropriate. US central bank officials also were split on whether the stubbornly low inflation would hit the Fed’s 2% target level. The minutes showed broad concern about the fragile state of the financial markets and the global economy even though stock market volatility from the beginning of the year had settled down by the time of their meeting. Since the meeting, Fed Chairwoman Janet Yellen gave a speech stressing the need for the US central bank to proceed cautiously on tightening monetary policy. At the same time, other Fed officials stated that they were open to considering an interest rate hike in April. The Fed’s next policy meeting is April 26-27.

Meanwhile, St. Louis Fed President James Bullard stated that US needs a medium-term growth strategy that is less oriented towards stabilization policy, stimulus, and is more oriented to what kinds of things would improve the long term and medium term growth prospects. Bullard has been concerned about that possibility that monetary policy has lost its punch after years stuck near zero. Cleveland Fed President Loretta Mester stated that she expects a gradual series of interest rate hikes this year given recent US economic strength.

The Dow Jones Industrial Average added 112.73 points or 0.64 percent to 17,716.05, Nasdaq gained 76.79 points or 1.59 percent to 4,920.72 while, S&P 500 was up by 21.49 points or 1.05 percent to 2,066.66.

The Indian ADRs closed mixed; Tata Motors was up by 0.24%, Dr. Reddy’s Lab was up 0.07% and HDFC Bank was up 0.04%. On the other hand, Wipro was down 0.05% and ICICI Bank was down 0.04%.