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Wall Street bounces back from Wednesday's Fed-led decline

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Wall Street's three major indexes on Thursday rebounded from Wednesday's sharp decline as investors reconsidered their reaction to Federal Reserve meeting minutes.

Energy stocks rose with oil prices and financial stocks were on track for their first percentage gain this week.

The stock market had closed lower on Wednesday, reversing a rally after signals that the Fed would start to trim its $4.5 billion balance sheet this year.

People in hindsight decided the market over-reacted," said Stephen Massocca, Senior Vice President at Wedbush Securities in San Francisco. "The Fed isn't going to be indiscriminately pulling the prop out from under the market. There will be some sensitivity to what's going on in the economy."

He also said that investors appeared to react positively to news that Republicans had pushed through a rule change that would likely pave the way for the confirmation of President Donald Trump's conservative nominee for the U.S. Supreme Court.

At 2:45 P.M. EDT (1845 GMT), the Dow Jones Industrial Average .DJI was up 54.97 points, or 0.27 percent, to 20,703.12, the S&P 500 .SPX had gained 6.69 points, or 0.28 percent, to 2,359.64 and the Nasdaq Composite .IXIC had added 14.40 points, or 0.25 percent, to 5,878.88.

Some investors were cautious ahead of Trump's meeting with his Chinese counterpart Xi Jinping as they await news on China-U.S. trade relations and discussions on reining in North Korea's arms program.

Doubts are rising about Trump's ability to deliver on pro-growth promises such as tax cuts. U.S. House of Representatives speaker Paul Ryan said Wednesday the tax reform bill could take longer than the stalled bill to overhaul healthcare legislation.

Eight of the 11 major S&P sectors were higher. The energy index .SPNY rose 0.8 percent as oil prices CLc1 LCOc1 rose to near one-month highs. [O/R] The S&P's Consumer Discretionary index was the S&P's biggest driver with Comcast Corp (CMCSA.O) its biggest contributor with a 2 percent gain to $38.11 after it announced a wireless service.

Ahead of the start of the corporate earnings season next week, some investors are also cautious given the lofty valuations. The S&P 500 index is trading at about 18 times forward earnings estimates, above its long-term average of 15.

The market's still look strong but they are massively overbought and we do have bank earnings beginning to come in next week. That will tell the real tale for the sector," said Phil Davis, chief executive of PSW Investments.

L Brands (LB.N) jumped 10 percent after reporting a smaller-than-expected drop in March sales.

Advancing issues outnumbered declining ones on the NYSE by a 3.07-to-1 ratio; on Nasdaq, a 1.99-to-1 ratio favored advancers.

The S&P 500 posted 8 new 52-week highs and four new lows; the Nasdaq Composite recorded 28 new highs and 58 new lows.

 


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